Q2 2024 Life Time Group Holdings Inc Earnings Call

Good morning and welcome to the Life Time Group Holdings, Inc. Q2 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero.

Operator: 2024 Earnings Conference. All participants will be in this room only. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Unknown Executive: All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the start key followed by zero.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1-800-PHONE-KEEP. To withdraw your question, please press star then 2.

Unknown Executive: To ask a question, you may have asked star, then wanting to tell the phone key pack.

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 in your telephone keypad. To withdraw your question, please press star, then 2.

Unknown Executive: To withdraw your question, please press star, then two. Please note this event is being recorded.

Operator: Please note this event is being recorded. I would now like to turn the conference over to Ken Cooper, Investor Relations. Please go ahead.

Ken Cooper: I would now like to turn the conference over to Ken Cooper, Investor Relations. Please go ahead.

Please note this event is being recorded.

I would now like to turn the conference over to Ken Cooper, Investor Relations. Please go ahead.

Erik Weaver: Good morning, and thank you for joining us for the second quarter 2020-24 Lifetime Group Holdings earnings conference call. With me today are Brahmakradi, founder, chairman, and CEO, and Erik Weaver, Executive Vice President, CFO. During this call, the company will make forward-looking statements, which involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today.

Ken Cooper: Good morning, and thank you for joining us for the second quarter 2024 Lifetime Group Holdings Earnings Conference Call. With me today are Bahram Akradi, Founder, Chairman, and CEO, and Erik Weaver, Executive Vice President, CFO. During this call, the company will make forward-looking statements that involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today. There is a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review.

Erik Weaver: Good morning and thank you for joining us for the second quarter 2024 Lifetime Group Holdings Earnings Conference Call. With me today are Bahram Akradi, Founder, Chairman and CEO , and Erik Weaver, Executive Vice President, CFO .

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

Erik Weaver: There is a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review. The company will discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as net debt leverage ratio, and free cash flow. This information, along with the reconciliation to the most directly comparable gap measures, are included, when applicable, in the company's earnings release issued this morning, are 8K filed with the SEC and on the investor relations section of our website.

Erik Weaver: The company will discuss certain non-GAAP financial measures including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as net debt leverage ratio, and free cash flow.

Erik Weaver: This information, along with the reconciliations to the most directly comparable GAAP measures , are included, when applicable, in the company's earnings release issued this morning, or 8K filed with the SEC, and on the Investor Relations section of our website. With that, I'll turn the call over to Erik.

Erik Weaver: With that, I'll turn a call over to Erik. Thank you, Ken, and good morning, everyone. As always, we appreciate you being on the call with us.

Ken Cooper: The company will discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as the net debt leverage ratio, and free cash flow. This information, along with reconciliations to the most directly comparable GAAP measures, is included, when applicable, in the company's earnings release issued this morning, our 8K filed with the SEC, and on the investor relations section of our website. With that, I'll turn the call over to Erik. Thank you, Ken, and good morning, everyone.

Erik Weaver: As always, we appreciate you being on the call with us. We are pleased to share with you our second quarter results, the full details of which can be found in the earnings release we issued this morning. For the second quarter, total revenue increased 19% to $668 million versus the prior year quarter, driven by a 20% increase in membership dues and enrollment fees and an 18% increase in in-center revenue. Access memberships increased 5% compared to last year to end the quarter at nearly 833,000 members.

Erik Weaver: Thank you, Ken, and good morning, everyone. As always, we appreciate you being on the call with us. We are pleased to share with you our second quarter results, the full details of which can be found in the earnings release we issued this morning.

Erik Weaver: We are pleased to share with you our second quarter results; the full details of which can be found in the earnings release we issued this morning. For the second quarter, total revenue increased 19% to $668 million versus the prior year quarter, driven by a 20% increase in membership dues and enrollment fees, and an 18% increase in incentive revenue. Access memberships increased 5% compared to last year to end the quarter at nearly 833,000 memberships. When combined with our digital on hold memberships, total memberships ended the quarter at approximately 879,000. Average monthly dues were $198, up approximately 13% from the second quarter of last year.

Erik Weaver: When combined with our digital on hold memberships, total memberships ended the quarter at approximately $879,000. Average monthly dues were $198, approximately 13% from the second quarter of last year. Revenue per active membership increased to $794 from $701 in the prior year period as we continue to benefit from higher dues and increased incentive activity. Net income for the quarter was $53 million versus $17 million in the second quarter of 2023. Adjusted net income was $52 million, an increase of $14 million versus the second quarter of 2023; diluted earnings per share was $0.26 compared to $0.08 per share in the second quarter last year.

Erik Weaver: For the second quarter, total revenue increased 19% to $668 million versus the prior year quarter driven by a 20% increase in membership dues and enrollment fees and an 18% increase in in-center revenue.

Erik Weaver: Access memberships increased 5% compared to last year to end the quarter at nearly 833,000 memberships.

Erik Weaver: When combined with our digital on-hold memberships, total memberships ended the quarter at approximately $879,000.

Erik Weaver: Average monthly dues were $198, up approximately 13% from the second quarter of last year.

Erik Weaver: Revenue practice membership increased to $794 from $701 in the prior year period, as we continue to benefit from higher dues and increased incentive activity. Net income for the quarter was $53 million, versus $17 million in the second quarter 2023. Adjusted net income was $52 million, an increase of $14 million versus the second quarter 2023. Deluted earnings per share was 26 cents compared to 8 cents per share in the second quarter last year. Adjusted EBITDA for the second quarter was $173.5 million, an increase of 28% versus the second quarter 2023, and our adjusted EBITDA margin of 26.0% increased 180 basis points as compared to the second quarter 2023.

Erik Weaver: Revenue per actus membership increased to $794 from $701 in the prior year period as we continue to benefit from higher dues and increased in-center activity.

Erik Weaver: Net income for the quarter was $53 million versus $17 million in the second quarter of 2023.

Erik Weaver: Adjusted net income was $52 million, an increase of $14 million versus the second quarter, 2023.

Erik Weaver: Diluted earnings per share was $0.26 compared to $0.08 per share in the second quarter last year.

Erik Weaver: Adjusted EBITDA for the second quarter was $173.5 million, an increase of 28% versus the second quarter 2023, and our adjusted EBITDA margin of 26.0% increased by 180 basis points as compared to the second quarter 2023. Net cash provided by operating activities increased 20% to $170 million as compared to the second quarter 2023. As a result of our strong financial performance, we generated positive free cash flow in the second quarter. In addition, we received net sale leaseback proceeds of approximately $143 million in the second quarter. Free cash flow was $175 million in the second quarter compared to $21 million in the prior year period.

Erik Weaver: Adjusted EBITDA for the second quarter was $173.5 million, an increase of 28% versus the second quarter 2023, and our adjusted EBITDA margin of 26.0% increased 180 basis points as compared to the second quarter 2023.

Erik Weaver: Net cash provided by operating activities increased 20% to $170 million as compared to the second quarter 2023. As a result of our strong financial performance, we generated positive free cash flow in the second quarter. In addition, we received net sale leaseback proceeds of approximately $143 million in the second quarter. Free cash flow was $175 million in the second quarter compared to $21 million in the prior year period. As a reminder, we include proceeds from sale-leasebacks and the sale of land in the calculation of free cash flow. However, we are pleased to note that we delivered approximately $26 million of positive free cash flow this quarter before sale-leasebacks or land sale proceeds.

Erik Weaver: Free cash flow was $175 million in the second quarter compared to $21 million in the prior year period.

Erik Weaver: As a reminder, we include proceeds from sale leasebacks and the sale of land in the calculation of free cash flow. However, we are pleased to note that we delivered approximately $26 million of positive free cash flow this quarter before sale leasebacks or land sale proceeds. We reduced our net debt to adjusted EBITDA leverage to 3.0 times in the second quarter versus 4.3 times in the prior year period.

Erik Weaver: We reduced our net debt to adjusted EBITL leverage to 3.0 times in the second quarter versus 4.3 times in the prior year period.

Erik Weaver: We reduced our net debt to adjusted EBITDA leverage to 3.0 times in the second quarter versus 4.3 times in the prior year period. We are extremely pleased with our continued financial performance and the expedited fashion in which we are achieving our key financial objectives. I will now turn the call over to Brahm.

Erik Weaver: We are extremely pleased with our continued financial performance and the expedited fashion in which we are achieving our key financial objectives.

Bahram Akradi: We are extremely pleased with our continued financial performance and the expedited fashion in which we are achieving our key financial objectives. I will now turn the call over to Brahm. Thank you, Erik. On behalf of the Board of Directors and the entire team at Life Time, I would like to thank you for all of your contribution over the past 20 years and congratulate you on the well-deserved promotion to Chief Financial Officer. You have certainly earned it, my friend.

Bahram Akradi: I will now turn the call over to Brian. Thank you, Eric.

Bahram Akradi: On behalf of the Board of Directors and the entire team at Lifetime, I would like to thank you for all of your contribution over the past 20 years and congratulate you on the well-deserved promotion to Chief Financial Officer. You have certainly earned it, my friend.

Bahram: I would like to thank you.

Bahram Akradi: Now to our financial results. During our Investor Day in May, we shared our strategies and priorities that have transformed Lifetime into the best version we have ever seen. The numbers that Eric just shared with you demonstrate how strongly our members have embraced the Lifetime brand and our dramatic evolution over the past three years. For Q2, we exceeded every one of our goals in terms of membership growth, retention, revenue, adjusted EBITL, free cash flow, leverage, and EPS. Every single financial goal we had set for ourselves and shared with you, we exceeded. At the beginning of the year, we shared our objective of improving our net debt to adjusted EBITL leverage ratio to three times by year end.

Bahram Akradi: Now to our financial results. During our Investor Day in May, we shared our strategies and priorities that have transformed Life Time into the best version we have ever seen. The numbers that Erik just shared with you demonstrate how strongly our members have embraced the Life Time brand and our dramatic evolution over the past three years. For Q2, we exceeded every one of our goals in terms of membership growth, retention, revenue, adjusted EBITDA, free cash flow, leverage, and EPS. Every single financial goal we had set.

Bahram: The numbers that Erik just shared with you demonstrate how strongly our members have embraced the Life Time brand and our dramatic evolution over the past three years.

Bahram: For Q2, we exceeded every one of our goals in terms of membership growth, retention, revenue, adjusted EBITDA, free cash flow, leverage, and EPS. Every single financial goal we had set.

Bahram Akradi: For ourselves, and shared with you, we exceeded. At the beginning of the year, we shared our objective of improving our net debt-to-adjusted EBITDA leverage ratio by three times by year-end. We achieved this important milestone six months ahead of schedule, and in the upcoming quarters, we will continue our path towards a leverage ratio of equal to two and a half times or less. We also shared our objective of becoming free cash flow positive by the end of the second quarter while funding double-digit top line and bottom line growth.

Bahram: For ourselves, and shared with you, we exceeded.

Bahram Akradi: We achieved this important milestone six months ahead of the schedule, and in the upcoming quarters, we will continue our path towards a leverage ratio of equal to 2.5 times or less. We also shared our objective of becoming free cash flow positive by the end of the second quarter, while funding doubled digit top line and bottom line growth. Again, we accomplished this objective and expect our free cash flow to improve over the quarters ahead as adjusted EBITL growth and our interest burden is lightened. Our next objective is to achieve a double B credit rating in the near term.

Bahram: We also shared our objective of becoming free cash flow positive.

Bahram Akradi: Again, we accomplished this objective and expect our free cash flow to improve over the quarters ahead as adjusted EBITDA grows and our interest burden is lightened. Our next objective is to achieve a Double B credit rating in the near term. We also intend to extend the maturities of our debt in the coming quarters.

Erik Weaver: Digit top-line and bottom-line growth. Again, we accomplish this objective and expect our free cash flow to improve over the quarters ahead as adjusted EBITDA grows and our interest burden is lightened.

Bahram Akradi: We also intend to extend the maturities of our debt in the coming quarters. We expect that the powerful combination of our revenue and adjusted EBITL growth, our positive cash flow, and double B rating will reduce our total interest expense. Further enhancing our free cash flow and EPR.

Bahram Akradi: We expect that the powerful combination of our revenue and adjusted EBITDA growth, our positive cash flow, and our Double B rating will reduce our total interest expense, further enhancing our free cash flow and EPS. As we stated in our earnings release this morning, we are raising our revenue guidance for the year to $2.56 billion at the low end and up to $2.59 billion on the high end. The midpoint of this range will deliver approximately $1.31 billion of revenue in the back half of this year versus $1.14 billion last year, implying a 14.6% revenue growth rate for the second half of 2024. For adjusted EBITDA, we raised our guidance to $642 million on the low end, up to $652 million on the high end.

Bahram Akradi: As we stated in our earning release this morning, we are raising a revenue guidance for the year to 2.56 billion in the low end and up to 2.59 billion on the high end. The midpoint of this range will deliver approximately 1.31 billion of revenue in the back half of this year versus 1.14 billion last year. The midpoint of this range would deliver approximately 327.5 billion of adjusted EBITDA in the back half of this year versus 2.5 billion last year. 680 million.7 last year, implying a 16.7% adjusted EBITDA growth rate for the second half of 2024.

Erik Weaver: As we stated in our earnings release this morning, we are raising our revenue guidance for the year to $2.56 billion in the low-end

Erik Weaver: and up to $2.59 billion on the high end. The midpoint of this range will deliver approximately $1.31 billion of revenue in the back half of this year.

Operator: The midpoint of this range would deliver approximately $327.5 million of adjusted EBITDA in the back half of this year versus $280.7 million last year, implying a 16.7% adjusted EBITDA growth rate for the second half of 2024. I want to thank the entire incredibly dedicated Lifetime team for their relentless commitment to delivering the best experiences to our members and great financial results for our investors. With that, we are now ready to take your questions. We will now begin the question and answer session. To ask a question, you may press the star on your telephone keypad.

Bahram Akradi: I want to thank the entire incredibly dedicated lifetime team members for the relentless commitment to delivering the best experiences to our members. And great financial results for our investors.

Unknown Executive: With that, we now are ready to take your questions. We will now begin the question and answer session. To ask a question, you may press star them on your telephone keypad. If using a speaker phone, please pick up your hands up before pressing the keys. To withdraw your question, please press star them too. At this time, we'll pause momentarily to assemble our roster.

Operator: If you're using a speaker phone, please pick up your hands before pressing the keys. To withdraw your question, please press star then 2. Thank you for your time. We'll pause momentarily to assemble our... Our first question will come from Alex Perry with Bank of America. You may now go ahead. Hey, thanks for taking my questions and congrats on a really strong quarter here. I just wanted to first ask Bahram, the in-center business dollar contribution was really strong in the quarter. Can you just talk about sort of what drove the strength in the in-center business and sort of what the plans are for that? Thank you, Thanks, Alex.

Alex Perry: Our first question will come from Alex Perry with Bank of America. He may now go ahead. Hey, thanks for taking my questions, and congrats on a really strong quarter here. I just wanted to first ask Baram: the in-center business dollar contribution was really strong in the quarter. Can you just talk about sort of what drove the strength in the in-center business and sort of what the plans are for that? Thank you.

Bahram Akradi: Thanks, Alex. It's the progress we're making on executing on our stated strategies that we had before. So we still have some room to go. We still have room to improve on the progress. Some clubs, as I've mentioned before, are ahead of others, and they are really executing on the exact play, and the numbers are absolutely incredible. Some clubs are mediocre, and some clubs will still have significant opportunity. And our dashboards and our systems today are basically set up to identify where the opportunities lie, and our team does an amazing job of getting together with those clubs where they still have significant opportunity and kind of troubleshoot how they can improve those.

Bahram Akradi: It's the progress we're making on executing on our stated strategies that we had before. So we still have some room to go. We still have room to improve on the progress. So we still have room in the SPA, we still have room in the cafe, we still have room in personal training, we still have room in many parts of our business. Perfect.

Bahram Akradi: So we still have room in the spa, we still have room in the cafe, we still have room in personal training, we still have room in many parts of our business to continue the progress on executing the strategies we have laid out for you guys.

Alex Perry: Thanks. Really helpful. And then my follow up is it looks like you raised the EBDA guide by more than you sort of beat the street. I guess what's driving that is it based on the momentum you're seeing carry into the third quarter? Thanks. Yeah, exactly, Alex. It's the momentum that we're seeing, as you notice the, you know, we're seeing a nice lift in our dues revenue, and you know, we're seeing a nice flow through from that. So that's just continuing to carry from Q2 in the Q3 and Q4 exactly.

Unknown Executive: Perfect. That's a lot going forward.

Unknown Executive: Thank you.

Erik Weaver: Perfect. Best of luck going forward.

Megan Alexander: Our next question will come from Megan Alexander with More Constantly.

Operator: Best of luck going forward. Our next question will come from Megan Alexander with Morgan Stanley. You just did a 26% EBITDA margin, and your updated guide implies something in the 25% range for the year. I think you have said in the past that 2Q is a seasonally lower quarter from a margin perspective, given the cost associated with the pool. So if that's the case, why can't you do better than 26% in the second half? Was there anything unique about 2Q that we should be aware of as we think about the second half?

Megan Alexander: You may not go ahead. Hi, this is pleased to ask on for a Megan Alexander. You did, you just did a 26% EBDA margin and your updated guide implies something in the 25% range for the year. I think you have said in the past that 2Q is a seasonally easy. You may lower quarter from a margin perspective, given the cost associated with the pool. So if that's the case, why can't you do better than a 26% in the second half?

Speaker Change: Hi, this is Liz Doss on for Megan Alexander.

Speaker Change: You just did a 26% EBITDA margin and your updated guide.

Speaker Change: I think.

Megan Alexander: Was there anything unique about Q2 that we should be aware of as we think about the second half?

Erik Weaver: Yeah, so this is Eric. I'll take that. So Q2 was again, we had a lot; we saw a lot of really great things. PT, for example, we saw nice, nice growth in PT, and stretch was a part of that. We had a very strong bistro season, so that helped us as well. And then we've got some lift from the NCOs as well. But you know, as you know, we have typical seasonality as we go into Q3 and Q4, which is, you know, typical for our business.

Erik Weaver: Yeah, so this is there. I'll take that. So Q2 was, again, we had a lot; we saw a lot of really great things. PT, for example, we saw nice growth, and PT stretch was a part of that. We had a very strong B-stero season. So that helped us as well. And then we've got, we got some lip from the NCOs as well. But, you know, as you know, we have typical seasonality that we go into Q3 and Q4, which is typical for our business. And so, you know, 26% margin is, you know, higher than we would guide you.

Speaker Change: as we think about the second half.

Speaker Change: Yeah, so this is Erik, I'll take that. So Q2 was, again, we had a lot, we saw a lot of really great things. PT, for example, we saw nice growth in PT, stretch was a part of that. We had a very strong bistro season, so that helped us as well. And then we got some lift from the NCOs as well.

Erik Weaver: And, as we said before, you know, we're targeting that 23 and a half, 24 and a half. So it's a couple of things there. But that's the low to the primary drivers.

Erik Weaver: And so, you know, a 26% margin is, you know, higher than we would guide you. And as we've said before, you know, we're targeting that 23 and a half, 24 and a half. So there are a couple of things there.

Bahram Akradi: And I want to add to that to our statement is all absolutely correct. Look, a company needs to be thinking about the next three years, four years, five years, and beyond. We need to continue to invest in developing new programs, new ideas, new initiatives that would accelerate the future growth of the company. And we feel the strong that the 24, 25% even the margin is a great margin. And rather than trying to continue to squeeze that for more and start herding the customer experience. We like to make sure we have the bullets to invest in the future of the company properly.

Bahram Akradi: But those are the primary drivers, and I want to add to that. We need to continue to invest in developing new programs and new ideas. We like to make sure we have the bullets to invest in the future of the company properly, so we do not want to guide you guys to a higher number than we are putting in front of you. You have a choice to do what you want to do. Simeon Siegel, John Baumgartner, John Heinbockel, Brian Nagel, Daniel Politzer, and Chris Woronka. As a result, we have a significant pipeline. I am least worried.

Speaker Change: It's a couple of things there, but those are the primary drivers. And I want to add to that, to Eric's statement, it's all absolutely correct.

Speaker Change: We like to make sure we have the bullets to invest in the future of the company properly. So we do not want to guide you guys to a higher number than what we are.

Unknown Executive: So we do not want to guide you guys to a higher number than what we are putting in front of you. You have a choice to do what you want to do. Okay, great. Thank you. That's all for me.

Speaker Change: Putting in front of you, you have a choice to do what you want to do.

John Heinbockel: Our next question will come from John. I am Bockel with Guggenheim. You may now go ahead. Hey, Bahram, question.

Speaker Change: Our next question will come from John Heinbockel with Guggenheim. You may now go ahead.

Bahram Akradi: Now that you sort of got in the balance sheet, almost where you want it, and sell these backs of comeback, maybe talk about your efforts to re-accelerate growth, right, and get to those 10 to 12 openings a year. Where do we stand on that process, and I think it's probably more, unless I'm wrong, 26, that we get there. But where do we stand on that, when I think about the pipeline through, whether it's the ground ups or the takeovers? How do you think about that over the next two years? Great question, John. We deliberately decelerated the new club expansion to achieve the very, very important milestone of becoming cash flow positive, responsible on how we spend our cash.

John Heinbockel: that we get there. But where do we stand on that when I think about the pipeline through whether it's the ground-ups or the takeovers? How do you think about that over the next two years?

Speaker Change: That's a great question, John. We deliberately decelerated, we deliberately decelerated the new club expansion to achieve the very, very important.

Bahram Akradi: Yet, we didn't slow down at all on searching and securing growth opportunities. As a result, we have a significant pipeline, where I believe over 24, 5, and 6, we can deliver easily 30 plus locations of a large formative equivalent. So, I am least worried we had so much momentum in the benefit we would get, as we have stated before, from our strategic initiatives, and we knew we have tailwind momentum coming from all the existing clubs to deliver double-digit growth. We could balance the new club launch, but continue to build the pipeline. So, our pipeline is more robust than ever, and I am absolutely confident we will deliver the type of top line and bottom line that you guys are looking for. And look, all the stuff we are doing right now is mapping out how we can accelerate the top line and bottom line growth from what we are willing to guide you to.

Speaker Change: As a result, we have a significant pipeline where I believe over 24, 5, and 6, we can deliver easily 30 plus locations of a large format equivalent.

Bahram Akradi: We had so much momentum in the benefit we would get, as we have stated before, and 26, including LTDigital, LTH, Lifetime Health Products, as well as Lifetime Partnerships, all of those things, as well as Miura. All of those things are additional opportunities to roll out, but our real estate pipeline is very, very robust. Great. Maybe as a follow-up to that, I mean, look, it does make sense, right, to continue to reinvest in the business. But what I think, can you talk a little bit about? You mentioned a few of them, right, but the things you want to invest in, right?

Speaker Change: So, I am least worried, we had so much momentum in the benefit we would get, as we have stated before.

Speaker Change: from our

Speaker Change: strategic initiatives and we knew we have tailwind momentum coming from all the existing clubs

Speaker Change: to deliver double-digit growth. We could balance the new club launch but continue to build the pipeline. So our pipeline is more robust than ever.

Speaker Change: And I am absolutely confident we will deliver the type of top line and bottom line that you guys are looking for. And look,

Speaker Change: The top line and bottom line growth from what we are willing to guide you to.

Bahram Akradi: And so, that is a combination of additional unit growth and all the initiatives we have in the pipeline, in the final stages of rollout for the rollout in 25 and 26, including LT Digital, LTH, Lifetime Health products, as well as Lifetime Partnerships, all of those things, as well as Miura. All of those things are additional opportunities to rollout, but our real estate pipeline is very, very robust.

Speaker Change: And so that's a combination of additional unit growth and all the initiatives we have in the pipeline in the final stages of rollout for the rollout in 2025.

Bahram Akradi: Great, maybe it is a follow-up to that. It does make sense to continue to reinvest in the business, but can you talk a little bit about, you mentioned a few of them, but the things you want to invest in, because you can leverage overhead pretty significantly. So the investment dollars are pretty, you know, are quite large, but Warren, what do you want to invest in? You know, kind of program wise, and then two maybe for Eric, the geography of that. Is that all going to show up in center ops as opposed to GNA? Well, let's go through this.

Bahram Akradi: Because you, I mean, you can leverage overhead, a pretty significant amount. Well, let's go through this. I think the most important transformation in this era is AI. You're going to be ridiculously behind, not investing appropriately in the customer experience, so that the customer has an easier time to transact, an easier time to engage. And then secondly, we need to use AI to create more additional efficiencies in the way we run everything.

Speaker Change: You mentioned a few of them.

Speaker Change: Right, but the things you want to invest in right because you I mean you can leverage overhead pretty significantly

Speaker Change: So the investment dollars are pretty, you know, are quite large. But one, what do you want to invest in, you know, kind of program-wise? And then two, maybe for Erik, the geography of that. Is that all going to show up in Center Ops?

Bahram Akradi: I think the most important transformation in this area is AI. If you're not going to be ahead, you're going to be ridiculously behind. Technology is an area that you can not, not invest appropriately. So we continue to be open-minded to see where we have to, where we must invest in terms of technology. So that's always going to eat some incremental capital. And, and very, very intentful at lifetime with that. First, AI needs to improve the customer experience so that the customer has an easier time to transact, an easier time to engage. And then secondly, you know, we need to use AI to create more additional efficiencies in the way we run everything.

Erik Weaver: Well, let's go through this. I think the...

Speaker Change: The most important

Speaker Change: Transformation in this era is AI.

Speaker Change: Not Invest Appropriately

Speaker Change: So we continue to be open-minded.

Speaker Change: to see where we have to, where we must.

Speaker Change: the customer experience so that the customer has easier time to transact, easier time to engage. And then secondly, you know, we need to use AI to create more additional efficiencies in the way we run everything.

Erik Weaver: So that's one area that we're going to continue to keep a very, very keen eye on. And then the second piece is just continue to invest in developing new initiatives, new accelerators of growth. Initially, those things will cost money before they can actually pay a dividend. And again, we don't want to pigeonhole ourselves into, can we do more than 25% EBITDA margin? Sure. Do I want to guide anybody to it? Absolutely not.

Speaker Change: So that's one area that we're going to continue to keep a very, very keen eye on.

Bahram Akradi: Just continue to invest in developing new initiatives, new accelerators of growth. And again, we don't want to pigeonhole ourselves into, can we do more than 25% EBITDA margin? Sure. But do I want to guide anybody to it?

Speaker Change: just continue to invest in developing new initiatives, new accelerators of growth.

Speaker Change: Initially, those things will cost money before they can actually pay a dividend.

Speaker Change: And again, we don't want to pigeonhole ourselves into, can we do more than 25% EBITDA margin? Sure. Do I want to guide anybody to it? Absolutely not.

Erik Weaver: Hopefully, I'm going to turn over to Eric. Yeah. And John, just to answer your question there, you know, as we think about those initiatives, you know, it includes digital retail, Bronze mentioned cafe, you know, we expect to see a lot of that come through, you know, our center of performance. And so yes, we'll invest the capital dollars, but we expect the margins of those initiatives to be accretive, not dilutive. Initially, they take some money; you know, you just going to make sure you have enough question. Between the last thing we want to do is come back and, you know, basically disappoint the street by saying, well, we have to invest in such such in order to deliver the future.

Speaker Change: Hopefully, I'm going to turn it over to Eric. Yeah, and John , just to answer your question there, you know, as we think about those initiatives, you know, it includes digital, retail, Brahms mentioned cafe, you know, we expect to see a lot of that come through, you know, our center performance. And so, yes, we'll invest the capital dollars, but we expect the margins of those initiatives to be accretive, not dilutive.

Speaker Change: Initially, they take some money, you know, you just want to make sure you have enough cushion.

Speaker Change: Between we the last thing we want to do is come back and you know, basically disappoint the streets

Unknown Executive: We are just making sure we are measured in how much we guide you guys. Thank you.

Speaker Change: Thank you.

Brian Nagel: Our next question will come from Brian Nagle with Oppenheimer. You mean I'll go ahead. Hey guys, good morning. Good morning, Brian. Eric, congratulations. Thank you very much, Brian. Thank you.

Operator: Absolutely not. Our next question will come from Brian Nagel of Oppenheimer. You may now go ahead. I think there are more opportunities for improving your execution. As long as you're delivering the customer what they're looking for, I think there are plenty of customers who are willing to pay for that. We are not seeing any weakness at all anywhere across our business.

Operator: You may now go ahead. Thanks. Good morning, everyone.

Eric: Eric, congratulations.

Brian Nagel: So I'll ask two really quick questions on Virgin together. You know, Brahman Eric, maybe just discussed how you just recently opened a number of new units. You know, just the performance of those centers. If you're seeing anything, particularly notable, as you're opening these centers.

Eric: Thank you very much, Brian . Thank you.

Speaker Change: So I'll ask two really quick questions, I'll merge them together. Bahram and Erik, have you just discussed, you just recently opened a number of new units, just the performance of those centers, if you've seen anything particularly notable as you're opening these centers.

Bahram Akradi: Then the second question, and I know this is a question I've asked before. But I want to give it up. We've got an update; you know, this is analyst of follow consumer. We keep looking around; we see signs of incremental weakness. We're clearly not seeing that in your results today, so I guess the question I have for you, Bahram, is you watched the behavior of your consumer. You see, Nathan, you suggest a slower trend anywhere. Thanks. Yeah, no, I can take that actually, you know, quite the opposite. As I mentioned, we had a very strong beast or a season season, so we're seeing really good lift there in our PT group stretch. Nutritionals, we're actually seeing an increase there, so as we look across our incentive business offerings, in almost all categories there, we're seeing significant growth there. So we're actually experiencing quite the opposite, and that's part of the engagement and all the things that we've been doing to continue to get members using those services.

Speaker Change: In our PT groups, stretch, nutritionals, we're actually seeing an increase there. So as we look across our in-center business offerings, in almost all categories there, we're seeing significant growth there. So we're actually experiencing quite the opposite. And that's part of the engagement and all the things that we've been doing to continue to get members using those services.

Bahram Akradi: Yeah, I think there are more opportunities in improving your execution than there are headwinds from a macroeconomic, so yes, I think, and maybe the overall customer base for the full universe has got some challenges, but for an entity focused on particular deliverables, as long as you're delivering the customer what they're looking for, I think there's plenty of customers who are willing to pay for that. We are not seeing any weakness at all, anywhere across our business.

Speaker Change: for the for the full universe is got some challenges, but for an entity focused on particular deliverables

Speaker Change: As long as you're delivering the customer what they're looking for, I think there's plenty of customers who are willing to pay for that. We are not seeing any weakness at all anywhere across our business.

Bahram Akradi: Right, I just did on the new centers, anything there into the notable there? Yeah, as my dearly my comment, their new new club openings are performing very well; they're at or above expectations, so we're seeing that was part of the lift I had mentioned earlier, so on track is expected. Yeah, they're actually ramping faster, generally speaking, than what we had seen in the past, you know, decade or so, and it's just the function of the fact that repositioning of the company to the brand delivers. I mean, this is one thing that I have to emphasize, our brand is delivering when we announce a club going into a market, we will get a massive natural buildup of people in a way this morning to join that club, that allows us to navigate much more clearly on how to price the club and everything else as we roll it out. We also are seeing the most amazing reflection of the brand on the other side of the business, which is attracting the best talent. You know, we're just opening a club in West Lake in Dallas, we are launching with 30 amazing personal trainers, the demand for lifestyle for these positions are right now, virtually, you know, we have about 20 times as many applicants as we need.

Ken Cooper: and Ken Cooper.

Speaker Change: Right, just on the new centers.

Speaker Change: Anything to be notable there? Yeah, as my dearly my comment, their new new club openings are performing very well. They're at or above expectations. So we're seeing that was part of the list I had mentioned earlier. So on track as expected. Yeah, they're actually ramping faster, generally speaking than what we had seen in the past.

Ken Cooper: You know decade or so. Oh, and it's just a function of the fact the repositioning of the company

Ken Cooper: to the brand delivers, and this is one thing that I have to emphasize, our brand delivers.

Ken Cooper: is delivering. When we announce a club going into a market, we will get a massive natural buildup of people in a wait list wanting to join that club. That allows us to navigate much more

Ken Cooper: clearly

Ken Cooper: on how to price the club and everything else as we roll it out. We also are seeing the most amazing.

Ken Cooper: reflection of the brand on the other side of the business which is attracting the best talent. You know we're just opening a club in Westlake in

Unknown Executive: You know, two field positions, so it's really the best position we have ever been. Please follow the color, congrats again, thank you. Thank you.

Ken Cooper: times as many applicants as we need, you know, to fill positions. So, it's really the best position we have ever been.

Simeon Siegel: Our next question will come from Simeon Siegel with BMO Capital Markets. You may now go ahead. Thanks, morning, everyone. Nice job.

Operator: Nice job. Hope you're all doing well and congrats on the promotion, Erik. Thank you. And the second part of your question, can you say that again? What was the structural?

Speaker Change: You may now go ahead.

Simeon Siegel: Hope you're all doing well, and congrats on the promotion, Eric. Thank you. So, among the other achievements, obviously, congrats on the increased dues. You guys have been talking about that.

Speaker Change: Thanks. Morning, everyone. Nice job. Hope you're all doing well, and congrats on the promotion, Erik.

Speaker Change: So among the other achievements, obviously, congrats on the increased dues. You guys have been talking about that. Could you...

Erik Weaver: Could you characterize how much of those increased membership dues was like to like increases in rate for maybe a new new member signing up at higher rates or upselling? And then maybe it was nice to hear maybe maybe speak a little bit more about the comment you made about the greater flow through you're seeing on the revenue from the structural business improvements you guys have been doing. Thank you. Yeah, Tim, I can take the right. So I would say it's roughly half and half. You know, we're still seeing some; we're seeing nice benefit from the new club openings.

Speaker Change: characterize how much of those increased membership dues was like-for-like increases in rate versus maybe the new members signing up at higher rates or upselling and then maybe it was nice to hear maybe maybe speak a little bit more about the comment you made about the greater flow-through you're seeing on the revenue from the structural business improvements you guys have been doing. Thank you.

Speaker Change: Yeah, I mean, I could take the rate. So I would say it's roughly half and half. You know, we're still seeing some nice benefit from the new club openings. We're also seeing some nice benefit from as you know, we have the churn and members coming on at a higher rack rate. So, you know, if I were to split it, I would say roughly 50-50.

Erik Weaver: We're also seeing some nice benefit from, as you know, we have the churn and members coming on at a higher rack rate. So, you know, if I were to split it, I would say roughly 50, 50.

Erik Weaver: And the second part of your question, can you say that again? What was the structural? Yeah, you guys have a line in the relief. You guys have a line in the release about I'm just seeing greater flow through on revenues now from structural business improvements you've affected. So maybe it's a great, it's a great year. So maybe just elaborate on that a little bit more. Yeah. So earlier, I think one of the earlier calls we kind of said we saw just a little bit of cost creep there. What we've done a nice job of, especially in our labor area year over year, we've done a great job of getting that.

Speaker Change: And the second part of your question, can you say that again? What was the structural?

Operator: Yeah, you guys have a line. Great. Nice job, guys, and best of luck for the rest of the year. Our next question will come from Owen Rickert with Northland Security. Go even higher, given the extreme levels of demand for new clubs. I mean, there are 12,000 people on the wait list at Harbor Island.

Speaker Change: Yeah, you guys have a line in the release. You guys have a line in the release about, I'm just seeing greater flow through on revenues now from structural business improvements you've affected. So maybe it's great to hear. So maybe just elaborate on that a little bit more.

Unknown Executive: Down relative to prior gear. So that's obviously direct flow through our bottom line. So we've done a real great job of just getting labor hours managing the summer hours and bringing those down versus prior year, not only in our, in our new clothes, but our mature clubs. Sounds great. Nice job, guys. And best luck to rest here. Thank you.

Speaker Change: Sounds great. Nice job guys and best of luck to the rest of the year. Thank you.

Owen Rickert: Our next question will come from Owen Richter with Northland Securities. You may now go ahead. Hey, bra. Hey area to congrats on the stellar quarter here. This quickly, could you provide us with some more color on initiation fees. I know they were implemented at the new Harbor Island location, but our fees going to become a bigger part of the story with new club openings going forward, and then quickly can these fees go even higher given the extreme levels of demand for new clubs. I mean, there's 12,000 people on the wait list at Harbor Island. So how does that influence initiation fees going forward?

Speaker Change: Our next question will come from Owen Richard with Northland Securities. You may now go ahead.

Owen Richard: Hey, Bahram. Hey, Erik. Congrats on the stellar quarter here.

Owen Richard: Just quickly, could you provide us with some more color on initiation fees? I know they were implemented at the New Harbor Island location.

Owen Richard: But are fees going to become a bigger part of the story with new club openings going forward? And then quickly, can these fees go even higher given the extreme levels of demand for new clubs? I mean, there's 12,000 people on the waitlist at Harbor Island. So how does that influence initiation fees going forward? Thank you.

Bahram Akradi: So how does that influence initiation fees going forward? Thank you. The brand experience is creating the demand. So when clubs get to a waitlist status, that's almost like the ultimate status for a lead general of one of our locations to get their club to the level where they can actually go on a waitlist. That means they're delivering on the experiences to a level that the customer is appreciating that delivery; they're creating more demand, and there's supply. Then, managing that supply and demand becomes the opportunity.

Bahram Akradi: Thank you. Well, if you look at that number, it's still always will be a minuscule number on a total dues revenue. So when we look at the membership revenue, I think initiation fees, one percent, one and a half pieces. It's just really non-event. It's more strategic than it is numerical. So again, I can't emphasize enough for 30 years. My team has focused on building the best brand in the leisure space. I really believe they're delivering. I'm indebted to the entire lifetime team more than ever. They really are delivering on that brand experience. The brand experience is creating the demand, and then managing the experience requires you being thoughtful about how do you properly gate the flow of the customer in and out of the club.

Speaker Change: Thank you. Well, look...

Speaker Change: look at that number it still always will be a minuscule number on a total dues revenue so when we look at the membership revenue I think initiation fee is 1% 1.5% it's just really non-event

Speaker Change: It's more strategic than it is numerical.

Speaker Change: I really believe they're delivering. I'm indebted to the entire Life Time team more than ever. They really are delivering on that brand experience.

Speaker Change: The brand experience is creating the demand.

Owen Richard: And then managing the experience requires you being thoughtful about how do you properly gate the flow of the customer in and out of the club.

Bahram Akradi: So when clubs get to await the status, that's almost like the ultimate status for a lead general of one of our locations to get their club to the level where they can actually go on a wait list. That means they're delivering on the experiences to a level that the customer is appreciating that delivery; they're creating more demand, and there's supply. Then managing that supply and demand becomes the opportunity.

Speaker Change: the ultimate status for a lead general of one of our locations.

Bahram Akradi: So we are more focused on applying a wait list and a larger initiation fee to make sure we can deliver the right experience to you when you go to that club, and we're going to see more clubs achieve that by really honing in on what they're not doing right in that experience delivery. We have all the dashboards; we guide them on, hey, here is where your opportunity is. You're not delivering the best experience in this part of your club, in that part of the club, and the clubs are delivered on all aspects. The cafe is doing great, the spa is doing great, the, you know, the PT is doing great, the kids program is doing great.

Bahram Akradi: So we are more focused on applying it. By really honing in on what they're not doing right in that experience delivery, we have all the dashboards, and we guide them on, hey, here is where your opportunity is. You're not delivering the best experience in this part of your club, in that part of the club.

Owen Richard: We are more focused on applying

Owen Richard: And we're going to see more clubs achieve that.

Owen Richard: by really honing in on what they're not doing right.

Owen Richard: in that experience delivery. We have all the dashboards. We guide them on, hey, here is where your opportunity is. You're not delivering the best experience in this part of your club, in that part of the club. And the clubs will deliver on all aspects. The cafe is doing great. The spa is doing great.

Bahram Akradi: And the clubs will deliver on all aspects. The cafe is doing great. The spa is doing great.

Bahram Akradi: The PT is doing great. The kids program is doing great too. The dues will automatically do great. And so then you can add the, then when you get to that level where you have more demand, you can put that in. So again, it's much more strategic than it is numerical, and I am really proud of our team for really embracing the strategies we launched post-COVID. You know, no salespeople. These results are with zero salesperson in the company.

Owen Richard: The, you know, the PT is doing great, the kids program is doing great, their dues will automatically will do great.

Bahram Akradi: The dudes will automatically will do great, and so then you can add the, then when you get to that level where you have more demand, you can put that in.

Owen Richard: And so then you can add the, then when you get to that level where you have more demand, you can put that in. So it's again, it's much more strategic.

Bahram Akradi: So it's again, it's much more strategic than it is numerical, and I am really proud of our team for really embracing the strategies we launched post COVID.

Owen Richard: Then it is numerical and I am really proud of our team for really embracing the strategies we launched.

Unknown Executive: You know, no sales people, these results are with zero sales person in the company. You know, we've told you guys this for the last three years, but maybe now the results speak for themselves. There's zero promotions, there's no advertising for the membership and the really is all done through the hard hard sweat of my team embracing the idea of being the best. Got it, got it, thanks, and great progress, guys. Love to see it.

Bahram Akradi: You know, we've told you guys this for the last three years, but maybe now the results speak for themselves. There are zero promotions. There's no advertising for the membership.

Owen Richard: Post-COVID.

Owen Richard: You know, no salespeople. These results are with zero...

Owen Richard: Salesperson in the company, you know, we've told you guys this for the last three years, but maybe now the results speak for themselves.

Owen Richard: There's zero promotions, there's no advertising for the membership, and it really is all done through the hard, hard, hard work.

Speaker Change: sweat of my team embracing the idea of

Speaker Change: Got it. Got it. Thanks and great progress guys. Love to see it.

Alex Fuhrman: Thank you. Our next question will come from Alex Furman with Craig Hall on Capitol Group. You may now go ahead. Terrific, thanks, guys, for taking my question. Ron, you shared some really impressive numbers at the analyst day a couple of months ago about pickleball participation and court counts. Curious, you know, have you continued to see pickleball scale over the last couple of months and how big of an opportunity could there be to potentially build more courts? Yeah, we are; we are on our continuous path of sort of delivering on the pickleball opportunity. We will continue.

Operator: And it really is all done through the hard, hard, Our next question will come from Alex Furman with Craig Howlum Capital. Hey morning, everyone. Congratulations on the results and congratulations to Eric on moving into the CFO role more permanently. Um, my question was just about Q1.

Speaker Change: Thank you.

Speaker Change: Our next question will come from Alex Furman with Craig Howland Capital Group. You may now go ahead.

Alex Furman: Terrific. Thanks guys for taking my question. Bahram, you shared some really impressive numbers at the Analyst Day a couple of months ago about pickleball participation and court counts.

Alex Furman: Curious, you know, have you continued to see Pickleball scale over the last couple of months and how big of an opportunity could there be to potentially build more courts?

Speaker Change: We are on our continuous path of

Speaker Change: sort of delivering on the pickleball

Bahram Akradi: Methodically building locations, adding courts to get to that stated 1000 courts in the next 18 months.

Speaker Change: methodically building locations, adding courts to get to that stated 1,000 courts in the next, you know, 18 months.

Bahram Akradi: And we just got our patent filed for the one. One of the problems with pickleball has been, and as a player for the last three years, been most frustrated with the pickleball, the ball itself. You know, there are balls of women. You get to the higher level of play; everybody wants a faster ball, but then they have had all kinds of design flaws, where they basically are inconsistent or the ones that the people like because they're fast, they break within like one game. But they, most importantly, play super inconsistent. So, as an engineer, I looked at these balls and I started looking at why it is so flawed in the design.

Speaker Change: [inaudible]

Speaker Change: got our patent filed for the one one of the problems with pickleball has been and as a player for the last three years been most frustrated with the pickleball the ball itself

Speaker Change: There are balls, when you get to the higher level of play, everybody wants a faster ball, but then they have had all kinds of design flaws.

Speaker Change: where they basically are inconsistent or the ones that the people like because they're fast, they break within like one game, but they most importantly, they play super inconsistent.

Speaker Change: So as an engineer, I looked at these balls and I started looking at why is it so flawed in the design. So we designed a new ball.

Bahram Akradi: So we designed a new ball. We took it through the testing trick to get through with our cat folks in the company, which is basically designed, it tested it, ran with it, played with it, made two, three, and we filed the patent officially yesterday. Super excited about that. I think we have the the answer, the ultimate answer to that to that thing. And so we're going to continue to play in that sport. I saw the opportunity to be the first leader in a sport, but I believed as soon as the first time I played, I thought this will be the sport, most participated by people in North America. I think it's got very high, very high potential of being an Olympic sport by the next Olympic.

Speaker Change: took it through the testing, took it through with our

Speaker Change: folks in the company, which is basically designed it, tested it.

Speaker Change: ran with it, played with it, made two, three, and we filed the patent officially yesterday. Super excited about that. I think we have the answer.

Speaker Change: The ultimate answer to that, to that thing. And so we're going to continue to play in that sport. I

Speaker Change: saw the opportunity to be the first leader.

Speaker Change: in a sport where I believed as soon as the first time I played, I thought this will be the sport.

Speaker Change: Most Participated

Speaker Change: by most people in North America, I think it's got very high, very high.

Bahram Akradi: So we're all in. We're all in. We're going to support the sports, just like we do with everything else. We're going to support other folks who want to play in this arena from MLT to PPA, partnerships, everybody else, and even other ball manufacturers or pedal manufacturers. We're going to try to help everybody. We think this is the sport that will get America off the couch into a physical activity beyond pickleball. What these people need to do is they need to actually work the rest of their bodies so they don't get pickleball injuries. So some people, unfortunately, all they do is play pickleball, and if you all you do is do any one kind of sport, you're prone to injury injuries.

Speaker Change: potential of being an Olympic sport by the next Olympics. So we're all in, we're all in, we're going to support the sport, just like we do with everything else. We're going to support other folks who want to play in this arena from

Speaker Change: from MLP to PPA, partnerships, everybody else, and even other ball manufacturers or pedal manufacturers. We're going to try to help everybody. We think this is the sport that will get America off the couch.

Speaker Change: into a physical activity. Beyond pickleball, what these people need to do is they need to actually work the rest of their bodies so they don't get pickleball injuries.

Speaker Change: So, some people, unfortunately, all they do is play pickleball.

Speaker Change: And if you all you do is do any one kind of sport.

Alex Fuhrman: So lifetime provides a full picture for them. They can play pickleball; they can also do all the supplementary things they need to do from nutrition to exercise, to, you know, training, to stretch. All of those things is basically available in one stop shop for everyone. We're fully committed to pickleball, Alex. That's really good to hear. Thanks very much.

Speaker Change: you are prone to injuries.

Speaker Change: So Lifetime provides the full picture for them. They can play pickleball, they can also do all the supplementary things they need to do from nutrition to exercise.

Alex Furman: to, you know, training to stretch, all of those things is basically available in one stop shop for everyone. We're fully committed to Pickleball Alex.

Alex Furman: That's really good to hear. Thanks very much.

Logan Reich: Our next question will come from Logan Rich with RBC Capital. Markets. You may now go ahead.

Speaker Change: Our next question will come from Logan Rich with RBC Capital Markets.

Logan Reich: Good morning, everyone. Congrats on the results, and that's Eric. My question was just on Q1. In the prepared, you guys sort of alluded to basically the entire quarter was better than you expected on every sort of KPI.

Speaker Change: You may now go ahead.

Logan Rich: Good morning everyone. Congrats on the results and congrats to Erik on moving into the CFL role more firmly. My question was just on Q1, in the prepares you guys sort of alluded to, you know, basically the entire quarter was better than you expected on every sort of KPI.

Operator: In the prepared remarks, you guys sort of alluded to, I guess I'm just trying to understand sort of what changed from relative to, you know, last quarter to this quarter and what was so much better that drove the NFL performance and, maybe just sort of expectations on those trends continuing through the year and through 2020. And yet, we left some opportunities on the table. It was abundantly clear, you know; do you think you could get to above 25% margins while still being able to adequately enjoy the 25% for some time?

Bahram Akradi: I'm just trying to understand sort of what came from relative to, you know, last quarter to this quarter and what was so much better that drove your outperformance and maybe just sort of expectations on those trends continuing through the year and through 2025. Okay, so first quarter, we executed well, and yet we left some opportunities on the table. It was abundantly clear to us that we needed to sort of a focus our team. The way we run our company today is our lead general. We call them lead general rather than general manager because everybody at Lifetime leads.

Speaker Change: I guess I'm just trying to understand sort of what changed from from relative to, you know, last quarter to this quarter, and what was so much better that drove the performance and, and maybe just sort of expectations on those trends continuing through the year and through 2025.

Speaker Change: Executed well.

Bahram Akradi: Nobody manages. All the department has lead. They actually do the work in the front line to demonstrate and to be in the loop. So our lead general's run their clubs with quite a bit of autonomy. We have provided the most amazing revolutionary dashboards for them and support system from the corporate so we can break down their business for them, show them their opportunities and then show them where they are basically maybe missing the opportunities and then coach them and help them to kind of get better execution.

Speaker Change: because everybody at Lifetime leads, nobody manages. All the department heads lead. They actually do the work in the front line to demonstrate and to be in the loop. So our lead generals run their clubs with quite a bit of autonomy.

Speaker Change: We have provided the most amazing

Logan Rich: revolutionary dashboards for them and support system from the corporate so we can break down their business for them show them their opportunities

Logan Rich: and then show them where they are basically maybe missing the opportunities and then coach them and help them to kind of get better execution. We were able to see

Bahram Akradi: We were able to see this execution more like a symphony are our president of club operations, Param and our RVPs and our area directors as well as our lead generals. They absolutely embraced the fact that they have the opportunity to look and not have waste. I am very, very forceful that the experiences cannot be compromised as you basically looking for efficiencies, but you also don't want to waste. So they were able to respond; they literally responded within four weeks.

Speaker Change: This execution, more like a symphony, our president of club operations, Bahram, and our RVPs, and our area directors, as well as our lead generals, they absolutely embraced

Logan Rich: the fact that they have the opportunity to look and not have waste. I am very very forceful that the experiences cannot be compromised.

Logan Rich: as you basically looking for efficiencies, but you also don't want to waste.

Erik Weaver: I want to turn over to Eric to because as a controller, as a CFO, as the guy who runs all the numbers and everything goes to him, he can tell you what he has seen. The company's ability to react today versus three, four years ago, Eric. Yeah, and that was part of my comment earlier that I had made. In the first quarter, we had kind of said a little bit of that labor or cost creep. Again, we've addressed that, and we saw very nice progression on that year over year in Q2, which of course falls to the bottom line.

Logan Rich: So they were able to respond. They literally responded within four weeks. I want to turn it over to Erik, too, because as a controller, as a CFO, as the guy who runs all the numbers and everything goes through him, he can tell you what he has seen.

Erik Weaver: The company's ability to react.

Logan Rich: today versus three, four years ago, Erik? Yeah, and that was part of my comment earlier that I had made, you know, in the first quarter, we had kind of said, you know, a little bit of that labor cost creep. Again, we've addressed that. And we saw very nice progression on that year over year in Q2, which of course falls to the bottom line.

Erik Weaver: As we mentioned, we've written more do's; flow through another thing that we're continuing to see is very, very good retention, better than we had planned, better than we had expected. So you've got better retention, you've got some churn from members. We've got some really great progress that office is making on the labor side. And then, of course, as we mentioned earlier on the incentive businesses, if you look across PT, cafe, kids, and aquatics, those are all up year over year. And again, that's indicating strong consumer demand for all of our products and services. So it's kind of, but it's all of those things; it's that symphony that Brahms you mentioned.

Logan Rich: As we mentioned, you know, we've got more dues flow through. Another thing that we're continuing to see is very, very good retention, better than we had planned, better than we had expected.

Logan Rich: So you've got better retention, you've got some churn from members. We've got some really great progress that office is making on the labor side.

Logan Rich: And then of course, as we mentioned earlier on the in-center businesses, if you look across PT, cafe, kids and aquatics, those are all up year over year. And again, that's indicating strong consumer demand for all of our product and services. So it's kind of a, it's all of those things. It's that symphony that Bahram mentioned.

Unknown Executive: Got it. Super helpful.

Unknown Executive: And then just one quick follow-up if I could, I think you sort of alluded to maybe some gap in some center of performance. I guess like if the centers that are, you know, maybe sort of lagging the higher, higher end centers, if those sort of got to, you know, maybe where the average is or if you got sort of improved those just on the blocking and tackling that you guys need to do. Is there any sort of. So I guess like upside to the 25% margins, like, I would assume those stores are lower margins than like. Would you reinvest those additional dollars or, you know, do you think you could get to above 25% margins while still being to adequately invest for future growth.

Speaker Change: Got it. Super helpful. And then just one quick follow up, if I could. I think you sort of alluded to, you know, maybe some gap in some center performance.

Speaker Change: I guess, like, if the...

Speaker Change: centers that are, you know, maybe sort of lacking the higher higher end centers.

Speaker Change: if those sort of got to

Speaker Change: you know, with maybe where the average is or if you got sort of

Speaker Change: improve those just on the blocking and tackling that you guys need to do? Is there any sort of, I guess, like upside to the 25% margins? Like, I would assume those stores have lower margins and like, would you reinvest those additional dollars or

Speaker Change: do you think you could get to above 25% margins while still being able to adequately invest for future growth?

Bahram Akradi: Alright, so I'm going to answer this a little differently to you. How many companies are delivering 25% EBITDA margin. I am adamant that we are not going to get pigeonholed into pushing, pushing, pushing until, like most businesses, you basically start deteriorating your business. We're not going to guide you to a higher margin than that. Does it mean we can't deliver more than that once in a while? Yes, we probably can. Do I want you guys to go put those numbers in? Definitely, I don't, but you can do what you want. We want to be able to deliver time and time again to you guys. When we give you a guidance, we want to make sure we have a very, very high certainty of delivering that number.

Speaker Change: All right, so I'm going to answer this a little differently to you.

Speaker Change: companies are delivering 25% EBITDA margin.

Speaker Change: I am adamant we are not going to get pigeonholed into pushing, pushing, pushing until, like most businesses, you basically start deteriorating your business. We're not going to guide you to a higher margin than that.

Speaker Change: Does it mean we can't deliver more than that once in a while? Yes, we probably can.

Speaker Change: Do I want you guys to go put those numbers in? Definitely I don't, but you can do what you want.

Speaker Change: We want to be able to deliver time and time again to you guys. When we give you guidance, we want to make sure we have a very, very high certainty of delivering that number.

Unknown Executive: So we're not going to put our neck on the line. We're not going to tell you to go to 26% because we did it in one quarter. Let's just, let's just. Enjoy the 25% for some time. If we can deliver more, we will deliver more. Got it. Appreciate the tolerance. Congrats again. Thank you.

Speaker Change: So, we're not going to put our neck on the line, we're not going to tell you go to 26% because we did it in one quarter. Let's just... Let's just...

Speaker Change: Enjoy the 25% for some time. If we can deliver more, we will deliver more.

Speaker Change: Got it. Appreciate it. Thank you.

Michael Hirsh: Our next question will come from Michael Hirsch with Wells Fargo. You may now go ahead. Hi there, and congrats on the quarter, and congratulations to you, Eric.

Operator: If we can deliver more, we will deliver more. Our next question will come from Michael Hirsh with Wells Fargo. You may now go. I'm going to answer your second question first and then go through it. We really are focused on our execution. Generally, 5 or 6% of their revenue is spent on marketing on average.

Speaker Change: Our next question will come from Michael Hirsch with Wells Fargo. You may now go ahead.

Michael Hirsch: Hi there and congrats on the quarter and congratulations to you Erik.

Bahram Akradi: Yeah, given your recent pricing increases, could you talk about the competitive environment at this time, and also, how does Lifetime react when competitors waive enrollment fees or discount? I'm going to answer your second question first and then go through. We really are focused on our execution. Not concerned about others at all, you know, the industry spends generally 5% or 6% of their revenue in marketing, and average, we're at 1.4% or less in the future. We just really don't focus on that. We focus on being one of the highest and leisure companies, expanding the breadth of our offering to all aspects of lifestyle.

Erik Weaver: Thank you.

Michael Hirsch: Given your recent pricing increases, could you talk about the competitive environment at this time? And also, how does Lifetime react when competitors waive enrollment fees or discount?

Speaker Change: I'm going to answer your second question first and then go through. We really are focused on our execution.

Speaker Change: [inaudible]

Speaker Change: concerned about others at all? You know, the industry spends...

Speaker Change: generally 5 or 6% of their revenue in

Operator: We're at 1.4% or less in the future, so are doing or not doing should answer your question. We are not. The interest environment, you know, on the way down, I think the sell-lease-back market will become way more robust, and we can secure lower cost of capital on the debt side and on the sell-lease-back, both the same. So I think the 25 looks incredibly more robust.

Speaker Change: We're at 1.4% or less in the future.

We just really don't focus on that. We focus on being one of the highest end leisure companies, expanding the breadth of our offering to all aspects of lifestyle.

Bahram Akradi: And we don't really focus on what others are doing or not doing. And I think that for the most part should answer your question. We are not concerned about any particular group or party.

Speaker Change: [inaudible]

Speaker Change: We don't...

Speaker Change: really focus on what

Speaker Change: others are doing or not doing.

Operator: and I think that, for the most part,

Operator: should answer your question. We are not concerned about any particular group or party.

Bahram Akradi: I have repeatedly stated if I personally left Lifetime and I took top 100% top 100 of my team members with me, there is no way for us to replicate anything that could put a dent into Lifetime in the next decade or more. It's just the scale of having 175 and adding 1,012 more per year of these type of facilities, our technology, our brand, 130 plus billion impressions a year. We are focused on what we can do better. There are still tons of opportunities in inventing new programs and really focused on our customer rather than focused on our competitor.

Speaker Change: I have repeatedly stated, if I personally left Lifetime and I took top 100%

Speaker Change: clipped top 100 of my team members with me.

Speaker Change: There is no way for us to replicate anything that could put a dent into lifetime.

Speaker Change: in the next decade or more.

Speaker Change: It's just the scale of having 175 and adding 10, 12 more per year.

Speaker Change: of these type of facilities, our technology, our brand, 130 plus billion impressions a year. We are focused on what we can do better. There are still tons of opportunities in inventing new programs.

Speaker Change: and really focused on our customer rather than focused on our competitor.

Unknown Executive: So that's your question. Yes, thank you. And there's a quick follow-up.

Speaker Change: So does that answer your question?

Speaker Change: Yes, thank you. And as a quick follow-up, could you talk about the sale-leaseback environment now and how we should think about sale-leasebacks in your cash flow profile into 2025?

Erik Weaver: Could you talk about the sale-leaseback environment now and how we should think about sale-leasebacks in your cash flow profile into 2025? It's great. So in we have another 6,566 million that we expect will get done here in the three queue. And then we really haven't been pursuing anything else. I am pretty confident that we will see a much better rate environment for all those people in the sell lease back market; they'll be able to get access to a better cost the capital, and that will translate directly to us. I also emphasize and my call our next biggest goal is to establish this company a, which I think we're almost there as a mid cap and growing because across the four and a half billion market cap get to five get beyond that.

Speaker Change: That's great. So, we have another 65-66 million that we expect will get done here in the 3Q.

Operator: And then we really haven't been pursuing anything else. I am.

Operator: pretty confident that we will see

Operator: at a much better rate.

Speaker Change: environment for all those people in the Selly SPAC market they'll be able to get access to a better

Operator: cost the capital and that will translate directly to us. I also

Operator: emphasized in my call, our next biggest

Speaker Change: The goal is to establish this company, A,

Operator: which I think we're almost there as a mid-cap and growing across the $4.5 billion market cap, get to $5 billion, get beyond that. And most importantly,

Bahram Akradi: And most importantly get to a double be credit with a double be credit the interest environment on the on the way down. I think the sell lease back market market become way more robust and we can secure lower cost the capital on the debt side and on the sell lease back both the same. So I think the 25 looks incredibly more robust. We have full intention of playing our strategy as an asset light company. We basically intend to recycle our own real estate assets to basically at the right time at the right cap rate to fund.

Operator: get to a double B credit. With a double B credit,

Operator: the interest environment, you know, on the, on the way down, I think the sell-lease SPAC market market become way more robust.

Operator: and we can secure lower cost of capital on the debt side and on the sell-lease back, both the same. So I think the 25 looks incredibly more robust.

Operator: We have

Operator: full intention of playing our strategy as an asset light company. We basically intend to recycle our owned real estate assets

Operator: to basically, at the right time, at the right cap rate, to fund

Bahram Akradi: But more accelerated growth in the next several years. Okay, so sell lease back is the part of the strategy. Is just the timing of the sell lease back we did as much as I think was prudent to do this year to achieve the three times debt to EBITDA. The other nice thing, as we mentioned and you guys have noticed, is that the incremental rent. We knew it's an it's not event relative to our over performance of EBITDA. So ultimately this, you know, this month, this proceeds coming from sell lease back are largely to just lower the debt to EBITDA substantially. Again, our goal is to get to two and a half times sooner than later, hopefully in the next.

Operator: more accelerated growth in the next several years.

Operator: Okay, so Selly SPAC is the part of the strategy. It's just the timing of the Selly SPAC. We did

Operator: As much as I think was prudent to do this year,

Operator: to achieve the three times debt to EBITDA. The other nice thing, as we mentioned, and you guys have noticed, is that the incremental rent, we knew it's non-event, relative to our over-performance of EBITDA.

Operator: So, ultimately, this, you know, this, this

Operator: Proceeds coming from Selle Eastpac are largely to just

Operator: to lower the debt to EBITDA substantially.

Operator: Again, our goal is to get to two and a half times sooner than later, hopefully in the next six months or more, or so. And then that puts us in exactly where we want to be, free cash, full of positive.

Bahram Akradi: Six months or more or so, and then that puts us in exactly where we want to be: free cash, full of positive two and a half times or less debt to EBITDA, you know, four and a half, five billion dollar market cap and growing. To basically all of those things stack up in lifetime's favor to have the best sell lease back rates going forward. Does that answer your question? Yes, thank you.

Operator: two-and-a-half times or less debt to EBITDA, you know, four-and-a-half, five billion dollar market cap and growing. So basically all of those things stack up in lifetime's favor to have the best sell-leaseback rates going forward. Does that answer your question?

Speaker Change: Yes, thank you.

Chris Woronka: Our next question will come from Chris Woronka with Deutsche Bank. You mean I go ahead? Hey, good morning, guys. Thanks for taking the question. You're so broad. A lot of good stuff going on, a lot of positive trends, and you've got to pretty clearly articulated growth plan with a lot of positive trends. And you've got to be a pretty clearly articulated growth plan with a lot of positive trends. A lot of a lot of legs to stool. So the question is kind of how do you how do you juggle all this? And do you have, you know, kind of the bandwidth internally to, you know, to kind of as these things grow because you've talked in the past, you know, including an analyst day about, you know, keeping a double-digit top line bottom line growth.

Operator: Our next question will come from Chris Waronka with Deutsche Bank. You may now go ahead.

Speaker Change: Hey, good morning, guys. Thanks for taking the question.

Operator: So, Bahram, a lot of good stuff going on, a lot of positive trends, and you've got it pretty clearly articulated.

Operator: Growth Plan with a lot of

Speaker Change: A lot of legs to the stool. So the question is kind of how do you how do you juggle all this and do you have?

Operator: you know, kind of the bandwidth internally to

Speaker Change: as these things grow, because you've talked in the past, including at Analyst Day about, keeping up double digit top line, bottom line growth. Do you have the bandwidth at the, I think really at the corporate level, but maybe a little bit down at the center level too. Thanks.

Chris Woronka: You have the bandwidth at the, you know, I think really it's a corporate level, but maybe, maybe a little bit down at the center level too. Thanks.

Bahram Akradi: Great question. The answer is absolutely are. I have never been more impressed with the lifetime team members. I am fully and entirely indebted to everyone from the front line to my direct reports. The best, the best alignment, the best teamwork. I've ever seen in 30 some years. Everybody is acting as one; nobody's self-centered, and we can, we can still deliver significantly more on other initiatives that are going on. But we are adding on. So, I have zero concern about us. And I love what I do. I don't like it. I love it. And I am never, you know, for all of those guys who work with me from your banks, you know, I'm always on, you know, and sort of it as a rest of my team.

Operator: Great question. The answer is absolutely.

Bahram Akradi: I have never been more impressed. You know, all of those guys who work with me in your banks, they know I'm always on, and so are the rest of my team. And we are, there isn't a team member that I will give a call on a Saturday afternoon or a Sunday night that I don't get a response to, you know, either pick up the phone or answer it, you know, or, but it's not just me, it's that's the way we all work together. Everybody's on, everybody's working as a team. It's never been better, my friend. Okay, good to hear. Thanks, Brahm. You may now go.

Bahram Akradi: I have never been more impressed.

Bahram Akradi: with the Lifetime team members.

Bahram Akradi: I am fully and entirely indebted to everyone from the front line to my direct reports. The best, the best alignment, the best teamwork.

Bahram Akradi: I've ever seen in 30-some years, everybody's acting as one, nobody's self-centered, and we can still deliver significantly more.

Bahram Akradi: on other initiatives that we are adding on. So I have zero concern about us.

Bahram Akradi: And I love what I do. I don't like it. I love it.

Speaker Change: I am never.

Bahram Akradi: you know, for all of those guys who work with me from your banks, they know I'm always on, you know, and so does the rest of my team. And we are isn't a there isn't a team member that I will give a call on a

Bahram Akradi: And we are; there isn't a team member that I will give a call on a Saturday afternoon, Sunday night that I don't get a, you know, either to pick up the phone or answer, you know, but it's not just me. It's asked the way we all work together. Everybody's on, everybody's working as a team. It's never been better, my friend. Okay, just to hear.

Bahram Akradi: Saturday afternoon, Sunday night that I don't get a, you know, either to pick up the phone or answer, you know, or, but it's not just me. It's us, the way we all work together. Everybody's on, everybody's working as a team. It's never been better, my friend.

Unknown Executive: Thanks for all.

John Baumgartner: Our next question will come from John Baumgartner with Mizzouvo Securities. You may not go ahead.

Speaker Change: Our next question will come from John Baumgartner with Mizuho Securities.

Bahram Akradi: Good morning. Thanks for the question. You know, first off, I guess I'm curious how you're thinking about member engagement and I guess specifically utilization that that's been increasingly pretty strongly coincidentally with the investments you've made in programming the last couple of years. But having to see utilization evolving from here, is there sort of a historical high watermark for member utilization and engagement that you haven't yet recovered back to at this point. Is there a ceiling for engagement where you sort of tap out for the incremental ROI on programming, moderate at some point. Just curious how you're thinking about utilization from here and how that governs your decisions for incremental programming.

Speaker Change: You may now go ahead.

Bahram Akradi: You know, first off, Brahm, I guess I'm curious how you're thinking about member engagement and, I guess specifically, utilization. That's been increasing pretty strongly coincidentally with the investments you've made in programming the last couple of years, but how do you see utilization evolving from here? Is there sort of a historical high watermark for member utilization and engagement that you haven't yet recovered back to at this point? Is there a ceiling for engagement where you sort of tap out for the incremental ROI, and programming moderates at some point?

Brahm: Good morning. Thanks for the question.

Bahram Akradi: First off, Bahram, I guess I'm curious how you're thinking about member engagement and I guess specifically utilization. That's been increasingly pretty strongly coincidentally with the investments you've made in programming the last couple of years. But how do you see utilization evolving from here? Is there sort of a historical high watermark for member utilization and engagement that you haven't yet recovered back to at this point? Is there a ceiling for engagement where you sort of tap out for the incremental ROI and programming moderates at some point? Just curious how you're thinking about utilization from here and how that governs your decisions for incremental programming investments.

Bahram Akradi: Just curious how you're thinking about utilization from here and how that governs your decisions for incremental programming. Guiding them. We are in the final weeks of launching LACI. That's the Lifetime AI Companion for all of our members. We've been in beta mode with that for quite some time.

Bahram Akradi: You're a great question, and it's the core of all programming. So basically, the connectivity to the members, understanding your member, knowing what incremental opportunities they have to maximize the benefits from their membership, guiding them. And we are, we are in the final weeks. Weeks of launching Lacey, that's the lifetime AI companion, to all of our members. We've been in beta mode with that for quite some time. And again, the goal there is to help the customers find the best opportunities to engage, have social opportunities for them to come to the all the amazing events we have in group fitness, amazing events we have on the beach clubs.

Speaker Change: It's a great question, and it's the core of all

Bahram Akradi: programming. So basically the connectivity to the members, understanding your member, knowing what

Bahram Akradi: incremental opportunities they have to maximize the benefits from their membership.

Bahram Akradi: guiding them on a we are we are in the final

Bahram Akradi: weeks of launching LACI, that's the Lifetime AI Companion.

Bahram Akradi: to all of our members. We've been in beta mode with that for quite some time.

Bahram Akradi: And again, the goal there is to help customers find the best opportunities to engage, have social opportunities for them to come to all the amazing events we have in group fitness and the amazing events we have at the beach clubs. It's just a constant imagination and reimagination of how we can deliver more incredible experiences to the customer. Again, we're a little frustrated when people just use the term gym because these places, as you guys know, are everything to our members. It's their social place, it's their beach club, it's their programs, it's their network. Yes, they get a workout, but it's all of those things.

Bahram Akradi: And again, the goal there is to help the customers.

Bahram Akradi: find the best opportunities to engage, have social opportunities for them to come to the all the amazing events we have in group fitness, amazing events we have on the beach clubs. It's just a constant

Bahram Akradi: It's just a constant imagination and re-imagination of how we can deliver more incredible experiences to the customer. Again, we're a little frustrated when people just use the term gym, because these places, as you guys know, it's like everything to our members. It's their social place; it's their beach club; it's their programs; it's their network. Yes, they get a workout, but it's all of those things. And we are constantly working on how to improve those things. It's from a member point of view. And as long as we continue to enhance the member point of view experiences, the engagement should increase.

Bahram Akradi: imagination and reimagination of how we can deliver more incredible experiences to the customer. You know, again, you know, we're a little...

Bahram Akradi: A little frustrated when people just use the term gym, because these places, as you guys know, it's like, it's everything to our members. It's their social place, it's their beach club, it's their programs, it's their network. Yes, they get a workout, but it's all of those things, and we are constantly working.

Bahram Akradi: And we are constantly working on how. Okay, thanks for your time. I am most, most appreciative and impressed by Life Time's incredible passionate team for executing on this vision with so much love and passion. So thanks to all of my team. Thank you all. Thanks to all of you guys.

Bahram Akradi: on how

Bahram Akradi: to improve those things from a member point of view. And as long as we continue to enhance the member point of view experiences, the engagement should increase.

Bahram Akradi: And the more engagement they have, results in more demand for the clubs, more weightless, which is good for us. It also creates better retention, which basically makes the churn go down, down, down. So we're fully engaged on it. I wouldn't say we are in any position to say this is it, we're never going to get better than this, but the numbers we have today are incredibly great. So they don't need to improve, but we like to see how we can do to make them go better.

Bahram Akradi: And the more engagement they have results in more demand for the clubs.

Speaker Change: More weightless, which is good for us.

Bahram Akradi: It also creates better retention, which is basically makes the churn go down, down, down. So we're fully engaged on it. I wouldn't say we are

Bahram Akradi: in any position to say this is it, we're never going to get better than this, but the numbers we have today are incredibly great.

Speaker Change: So they don't need to improve, but we'd like to see what we can do to make them go better. But this is amazing engagement I've ever seen in 40 years in this industry.

Erik Weaver: But this is amazing engagement I've ever seen in 40 years in this industry. Excellent.

Erik Weaver: And a follow up for Eric on the offering leverage and specifically the overhead in the general and administrative line. The progress there is pretty consistent for the past two years or so. And I'm curious how much efficiency you can still get on that G and A line going forward with all the moving parts around programming and leveraging what you've had the last couple of years with sort of the outlet build outs. Yeah, that's a good question. We've seen leverage. We've seen great leverage. I think we'll continue to see some leverage as we continue to grow.

Speaker Change: Excellent. And a follow-up for Erik on the operating leverage.

Speaker Change: and specifically the overheads in the general and administrative line. The progress there has been pretty consistent for the past two years or so. And I'm curious how much efficiency you can still get on that G&A line going forward with all the moving parts around programming and, you know, leveraging what you've had the last couple of years with sort of the, you know, the outlet build outs.

Speaker Change: Yeah, it's a good question that, you know, we've seen, we've seen leverage, we've seen great leverage, I think, you know, we'll continue to see some leverage as you know, we continue to grow, we will, you know, make some investments as we need to, but, but I would expect that we'll continue to see that lever down a little bit as we continue.

Unknown Executive: We will make some investments as we need to, but I would expect that we'll continue to see that lever down a little bit as we continue. Okay, thanks for your time. Okay.

Bahram Akradi: Okay, thanks for your time.

Bahram Akradi: This concludes our question in the intercession. I'll look to turn the comments back over to Baram. All right, I just have one quick comment before I leave the call. I want to make sure the credit goes to where the credit is due. That's definitely not me. It's the entire lifetime team. I am most, most appreciative and impressed by the lifetimes, passionate, incredible team for execute. Thank you, Dean, on this vision with so much love and passion. So thanks to all of my team. Thank you all; thanks all of you guys.

Bahram Akradi: This concludes our question and answer session. I'd like to turn the conference back over to Bahram Akradi for any closing remarks.

Speaker Change: I just have one quick comment before I leave the call.

Bahram Akradi: I want to make sure the credit goes to where the credit is due. That's definitely not me. It's the entire Lifetime team.

Bahram Akradi: I am most most appreciative and impressed.

Bahram Akradi: by the Lifetime's passionate, incredible team for executing on this vision with so much love and passion. So thanks to all of my team. Thank you all. Thanks all of you guys.

Unknown Executive: The conference is not included. Thank you for today's presentation. You may now.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.