Q4 2024 Life Time Group Holdings Inc Earnings Call
Speaker Change: Greetings and welcome to the Lifetime Group Holdings Q4 2024 earnings conference call.
At this time, all participants are in a listen-only mode.
Speaker Change: A question and answer session will follow the formal presentation. If you require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Conor Weinberg, VP of Investor Relations and Capital Markets. Thank you, Conor. You may begin.
Conor Weinberg: Good morning and thank you for joining us for the fourth quarter and full year 2024 Lifetime Group Holdings Earnings Conference Call. With me today are Bahram Akradi, Founder, Chairman and CEO, and Erik Weaver, Executive Vice President and CFO.
Conor Weinberg: During the call, we 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.
Conor Weinberg: The company will also 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.
Conor Weinberg: This information along with the reconciliations to the most directly comparable gap measures are included when applicable in the company's earnings release issued this morning. Our AK filed with the SEC and on the investor relations section of our website. With that, I will turn the call over to Erik.
Erik Weaver: Thank you, Connor, and good morning, everyone. As always, we appreciate you joining us for our business and financial update. 2024 was an exceptional year for our company. We achieved many significant milestones and exceeded our expectations with our strong financial results.
Erik Weaver: Our comparable center revenue of 13.5% was the largest of the year. This was a result of both membership dues and in-center revenue having the largest comparable center revenue growth of the year in Q4, which is a direct result of the significant engagement we are seeing from our members.
Erik Weaver: Center memberships increased 6.4% compared to last year to end the quarter at more than 812,000 memberships. When combined with our digital on-hold memberships, total memberships ended the quarter at approximately 866,000.
Erik Weaver: Average monthly dues were $201 up approximately 10% from the fourth quarter of last year and average revenue per center membership was $796 up 12% from the prior year quarter.
Erik Weaver: Net income was $37.2 million, up 57%, and adjusted net income was $60.3 million, up 59% from the prior year quarter.
Erik Weaver: Adjusted EBITDA was $177 million, up 28.5%, and our adjusted EBITDA margin of 26.7% increased 210 basis points.
Erik Weaver: Net cash provided by operating activities increased approximately 24% to $163 million, as compared to the fourth quarter 2023.
Erik Weaver: For the third consecutive quarter, we achieved positive free cash flow. Free cash flow was approximately $27 million, and we had no sale leaseback proceeds in the fourth quarter.
Erik Weaver: For the full year, total revenue increased 18.2% to $2.621 billion, driven by a 19.1% increase in membership dues and enrollment fees, and a 16% increase in in-center revenue.
Erik Weaver: Average revenue per center membership was $3,160, up 12.5% from the prior year.
Erik Weaver: Net income increased 105% to $156.2 million and adjusted net income increased 55% to $200.5 million. Adjusted diluted earnings per share was $0.95 compared to $0.64 per share for the prior year.
Erik Weaver: In addition to an increase in income from operations in 2025, we expect net income to benefit from reduced cash interest expense due to our reduced debt levels and the refinancing we completed in the fourth quarter.
Erik Weaver: Based on recent SOFR rates, we expect net interest expense of $90 to $94 million.
Erik Weaver: Adjusted EBITDA increased 26.1% to 676.8 million dollars and our adjusted EBITDA margin of 25.8 increased 160 basis points compared to the full year 2023.
Erik Weaver: As a result of our intentional and strategic repositioning of the company in prior years, which included the rewiring of our operations, we have continued to expand our operating margins and now expect to achieve adjusted EBITDA margins in excess of 26%. With that, I will now pass the call over to Bahram.
Bahram Akradi: Thank you, Erik. Based on the strength of what we have seen so far this year, we raised both our revenue and adjusted EBITDA guidance for 2025 from what we had preannounced in mid-January.
Bahram Akradi: Our revenue guidance is now $2,925,000,000 to $2,975,000,000 and adjusted EBITDA guidance is now $780,000,000 to $800,000,000.
Our core business continues to deliver impressive results.
Bahram Akradi: The main driver of our success has been delivering on our incredible member experience.
Bahram Akradi: This has resulted in the best retention in our 32-year history, which is one of the most important key performance indicators.
Bahram Akradi: We continue to fine-tune our operations to improve the desirability of our places, programs, and performers, and therefore, we expect to exceed the 2024 retention levels in 2025.
Bahram Akradi: In connection with our record membership retention, we're seeing record levels of revenue per membership driven both
from dues and in-center businesses.
Bahram Akradi: Additionally, our new club pipeline is as robust as it's ever been.
Bahram Akradi: We expect to open 10 to 12 clubs in 2025, with the ability to extend the number of openings for 2026 and 2027, given the depth of our pipeline.
Bahram Akradi: We intend to maintain our current debt levels of approximately $1.5 billion.
while we continue to grow revenue and EBITDA.
Bahram Akradi: This implies a net debt leverage ratio of less than two times by the end of this year. As a reminder, that number was just 2.28 times at the end of 2024, as you saw in our press release.
Bahram Akradi: We plan to use our operating cash flow and any proceeds from sell lease backs to accelerate the number of new club openings in the future, taking advantage of our robust pipeline.
Our Lifetime brand is providing significant additional asset-light growth opportunities.
First LT Digital
Bahram Akradi: Our free digital subscription, which we launched last February, now has more than 1.7 million subscribers and it's growing more than 100,000 subscribers per month, naturally and without any marketing effort.
Bahram Akradi: LTH Nutritional Supplements are seeing strong growth month after month and Miura, our health optimization and longevity offering, is progressing forward as planned and we are about to open our second location next week.
With that, we're ready to answer your questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Thank you. Our first question comes from the line of Brian Nagel with Oppenheimer. Please proceed.
Brian Nagel: Hey guys, good morning. Good morning, Brian. Congratulations on a fantastic quarter, fantastic year.
Brian Nagel: Thank you. So I have a couple questions. First, I guess this is just a more of a maybe a growth question, Bahram, but so you in your outline, your outlook here, you're talking about 10 to 12.
Speaker Change: So with the balance sheet, where it is now, you know, you've done that great job of getting the debt ratios down to, I mean, frankly, below what you initially even targeted.
Speaker Change: Yeah, thank you so much, Brian. We just had a conversation with R, the CEO of the largest
partner of ours on Sudley SPAC.
a couple days ago, we have agreement for them to
Speaker Change: step in. They want about 240 to 250 million dollars worth of salaries back from us for this year.
Speaker Change: and they're just phenomenal partners. We have incredible trust relationship and so that is just one of the incoming
demands for our
large square footage from singular tenant net lease
Speaker Change: where you have had a tenant who has basically continually paid rent even through the COVID period. So we have significant amounts of demand for our real estate.
I think
Speaker Change: The $250 million to $300 million, $350 million Celi's back is sort of easily in the expectation for this year and on the low end.
We.
expect to sort of spread that out?
Speaker Change: so that we take the money, the net proceeds from the Selely SPAC, and basically apply it to additional growth. The pipeline, as I mentioned in my remarks,
They need lifetimes.
traffic and brand to sort of
improve the returns on those. We have
Suburban Sites
Speaker Change: incredibly robust demographics. So we just basically are balancing, you know, as I mentioned, our expectation is to
Speaker Change: You know, we have about $1.5 billion of debt as the, you know, we expect.
Speaker Change: some time this year to actually receive our BB rating for at least one more agency. We have positive conversations with them with that and with where the SOFR will be.
Speaker Change: Our expectation is the cost of that debt is roughly 6%, so really, really great debt. With having three and a half billion dollars worth of owned market value real estate,
Speaker Change: A billion five of that is, you know, virtually could either apply that way or less than two times that to EBITDA. So we don't need to reduce that debt at this point. With the
Speaker Change: Potential we have in our pipeline, we would like to just use all the free cash flow we generate after interest payments and modernization and maintenance capital, take all of that plus any proceeds from
Speaker Change: Sell these facts and just continue to grow the business. We are having amazing results on our
Speaker Change: same store we have amazing results on all of our new clubs so we were really really happy with the way the business is functioning and it's just really
Speaker Change: pacing correctly and managing the growth of the business correctly, but we have plenty of opportunity there.
Speaker Change: That's very helpful, Bahram. Before I jump to my follow-up question, just quickly on that.
Speaker Change: So, and I know this is a big focus for investors broadly, but I mean, how are you thinking about the sale of leasebacks while the market's clearly wide open and there's a lot of demand? How do you think about the rates?
Speaker Change: Rates are, it's so, you know, it's actually, it's crazy to me, since we went private...
Speaker Change: Unknown Speaker 10. Okay. Well. Unknown Speaker 10. Yeah. Okay. Thanks for having me. Unknown Speaker 10. Okay.
Speaker Change: The blended average of everything we've done is somewhere like six and a half to six, seven, six, eight.
and I expect everything will happen.
Speaker Change: In that same, like a six and a half to seven, it won't touch seven, but in that same range, so it's, and frankly, if it was 25 basis, higher or lower, it's virtually has zero impact on.
Speaker Change: The total economic of the business, the EBITDA margin for the business right now is so strong.
Speaker Change: So you're paying a quarter more on rent or something in a 25 business point more on rent. It's just it's irrelevant so We we really aren't hindered by
Speaker Change: You know by that we can just take these sell these facts with with the right partners So we're long-term right partners and just
Speaker Change: pace them in as we want to bring that cash. And there's no reason to do them too fast. You know, if we can deploy that capital back into the market, there's really no value in doing it. But there is...
Speaker Change: Zero concern from my side that we would want to do a sell this back then there wouldn't be somebody taking it.
Speaker Change: in the in the in the cap rate range that is acceptable to us.
Speaker Change: That's very, very helpful. So my second question, maybe more for Erik, but you look at that, so you pre-announced positively, you know, Q4 results in maybe basically mid-January. So here we are a month later, a little bit more than a month later.
Ubud, Ubud,
Speaker Change: I mean, so I guess the question is, as you look at the business, is there anything particular that changed over the last several weeks?
Again, sorry for the delays. Please hold.
All right, apologies for the technical difficulties.
Speaker Change: I believe Brian, you were, we weren't finished answering your question. He's still in queue. Brian, are you able to hear us okay?
and many more. Thank you. Thank you.
Brian.
We may have lost Brian.
Speaker Change: All right, let's go. Yep. All right. Our next question comes to the line of Megan Clapp with Morgan Stanley. Please proceed.
Hi, good morning. Can you guys hear me?
We got you.
Speaker Change: Awesome. Okay. First question is just a little bit of a clarification to some of the comments, Bahram, you made on leverage expectations and sale ease back. So
I think in the release, you know, the guide.
you called out maintain leverage at or below 2.25 times.
Speaker Change: Bahram, I think you said in your prepared remarks, it would imply less than two times by the end of the year. So I just want to be clear on what exactly is your expectation as it relates to where leverage should end the year, presumably.
Speaker Change: you know, the level you're going EBITDA at, unless there's some other cash flow dynamics going on, it leverage should come down to end the year, but just want to make sure that I'm totally clear on that. And is sale leaseback something you're embedding in your cash flow expectations today? Or that, you know, would be incremental? Great question.
So...
but I, but I
said was that our
expectation is to make sure we keep
are dead to even under 2.25 times. That's the goal.
is to stay under 2.25 times
Speaker Change: That's the number that we understand we need to be to make sure we stay in that double B zone from the agencies.
Speaker Change: and that's the number I believe would be perfectly fine for the company to maintain anything under 2.25.
Speaker Change: In my remarks, I merely suggested that based on where we expect the EBITDA to finish end of the year, and if you maintain roughly that $1.5 million,
Speaker Change: billion five of debt, you're going to end up naturally just under two times that to even.
Speaker Change: So, the goal is to stay under 2.25, and the forecast is going to be, if we keep the billion five of debt, then we should be under two times debt to EBITDA.
that's
That's the first part of your question.
Speaker Change: for clarity. Is that helpful, Megan? Yep, crystal clear. Thank you. So now, as far as the cell lease facts,
Speaker Change: So, you know, as we've run through the math, you know, it looks like roughly around $500 million of cash flow generated, you know, give or take.
Speaker Change: you know, $50 million or whatever. So you have that generated from the core business.
after debt and modernization and maintenance capex.
So that's $500 million plus any proceeds from sell leasebacks.
Speaker Change: Not more than $25 million on average that we've talked about before. When we build from scratch, ground up, those will cost more than that $25 million.
But when you're recycling
The Selly SPAC dollars
Speaker Change: You could basically, for simplicity, take that $25 to $30 million per opening and just apply that to however many.
Speaker Change: as possible for everyone to follow is how we think about
Speaker Change: Staying cash, you know, at this point, we don't need to to be significantly free cash flow positive.
Speaker Change: After growth, after all the growth, because the death levels, as we mentioned, is in the right place. So now we want to have sort of a cash flow positive to neutrality, more or less, in that range.
Speaker Change: for the debt standpoint, and then take all the rest of the opportunity and apply it to growth.
Speaker Change: Maybe if I could just follow up on EBITDA margin. So 26.7%, I think, for the year, and you're guiding to that again in 25. So it was a couple of quarters ago, I think, where...
Speaker Change: You know, you were really sticking to 26%. And I think at the time you commented on, you know, maybe not wanting to
Speaker Change: squeeze more and start hurting the member experience. So obviously, the business has performed well, and it's it's nice to see the leverage you've gotten as that's as that's occurred. But
Speaker Change: How are you thinking about margins today? Close to 27%. Does that comment still apply of, you know, you're not going to try and squeeze the business for more? Are there areas where...
Speaker Change: You'd look to invest a bit more. Just how should we think about kind of how you're thinking about the EBITDA margin outlook broadly going forward? Once again, another great clarification question. I always said to you guys, here's what we would like you guys to sort of.
put in your models.
Speaker Change: I never said it can't be more. I did tell you guys it can be more. Just don't model more because we want to have the flexibility to invest.
in the quality of our offering.
Bigger Revenues, Bigger Incentive
We are not compromising at all.
anything that is customer experience
Speaker Change: to generate more margins. The margins are beautiful. They're fantastic. I think that I would be happy to have any business to generate north of 25% EBITDA margin.
Speaker Change: So, but it doesn't mean we can't do more. I just don't want to keep being pushed.
Speaker Change: by the street to have to do more, more, more, because eventually you're going to hurt your business. We're not going to allow that to happen. So for right now, what we are telling you is the margin for 2020.
Speaker Change: I think it's a very healthy EBITDA margin. It possibly could be slightly more as time goes on, but we just want to make sure we keep everybody's expectations in check. Understood. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Alex Perry with Bank of America. Please proceed.
Alex Perry: Hi, thanks for taking my questions here and congrats on a really strong quarter.
Speaker Change: I guess just given some of the commentary in the press release, is it fair to say that the comps in our sales are sort of running above the 7-8% for the year in the first quarter?
Speaker Change: sort of giving you lifted your guide versus the pre-announcement just over a month ago.
Speaker Change: And then I think you raised your sort of implied EBIDTA guide by 60 basis points versus your pre-announcement, you know, what is the key?
Speaker Change: Driver there. I think the EBITDA guide sort of came up a bit more than the revenue guide Can you just talk about you know, how are you how you're thinking about that? Thanks
Speaker Change: Yeah, I think you've got it. You've got it right there, Alex. The 7% to 8% is kind of the full year there. And, you know, we're still we're lapping some of the strategic.
Speaker Change: Unknown Speaker Things that we did. So the expectation is that that would be, you know, a little bit higher in Q1. So that that slope, you're thinking about that, that exactly right.
Speaker Change: So we would expect, you know, Q2, Q3, Q4, again, in terms of, you know, how we started the year, just what we're seeing in the flow, the strong flow through from the revenue, we're seeing strong average dues.
Speaker Change: We're seeing strong retention in both Jan and Feb. So, so that's really, you know, part of that flow through directly attributable to the increased margin.
Speaker Change: format clubs. And then, you know, how do you think about sort of the pricing opportunity as you start to approach that, you know, what you see is the, you know, desired club capacity, it looks like you're starting to implement enrollment fees on in a lot of your clubs.
Speaker Change: Is there a lot of continued embedded pricing opportunity as we look into the business this year? Thanks. Alex, as always, you have great questions, great insights, so let me help out to everyone with your question here.
Really, when you think about a club,
There is a certain amount of visits you can generate.
within a particular club.
not necessarily just based on square footage.
Speaker Change: It's based on all kinds of things, based on the flow of the club, the design of the club, the parking lot, and just basically whatever is your bottlenecks, your biggest bottlenecks in a particular location is, basically creates a
natural number of how many people can visit the club
Speaker Change: successfully to our, you know, sort of an incredible experiential visit for that customer.
and that
Speaker Change: becomes your limiting factor on how many visits you have and then if you take that number say, okay, it's 12 visits a month.
Speaker Change: 13 visits a month, right, per customer. It just gives you a number for how many members you can have in that club and deliver the four season, the Ritz-Carlton quality that Lifetime always delivers to do that.
basically gives you that number. Now, your opportunities come
vary differently in different locations. If a particular club is
significantly below that
maximum comfort swipe number on a monthly basis, right?
Speaker Change: Then you can work on your programming on your talent that you bring in to try to have more visits in that particular club which results in more members.
If you have reached a point
where you club is saturated from that
number of swipes, number of visits per day.
Now, you have pricing opportunity.
Speaker Change: You have your waitlist, then you start adding enrollment fees, and you raise the dues to find the right equilibrium in that club. And then that will add...
More.
Speaker Change: of that, what we have talked to you guys about. It's interesting to me, a year and a half ago, we were having these conversations and we had what, $17 million worth of,
Speaker Change: dues per month if we had taken everybody who is not paying the RAC rate to the RAC rate.
Speaker Change: During this last, you know, 18 months, we have raised dues on those legacy customers, the people who are paying below,
Speaker Change: And now we're up to 20 million plus of dues per month, which is the gap, because as we've been managing the right
Speaker Change: Rack rates naturally have come up, which then has not, you know, basically
Speaker Change: expanded that difference between the differential between the non rack paying customers to the to the rest. So now when you look at our company and we look in the in the next several years
Speaker Change: three years, four years, five years, we expect that just the natural flow of the dynamics of everything we told you is gonna generate strong same-store growth on the do's side.
Speaker Change: And then, very, very interestingly, as we are focusing on this more,
affluent, sophisticated customer who
Speaker Change: in the best experiences, which is what we are just very strategically getting more and more of that type of customer in the club. We have experienced the lowest attrition rates
Speaker Change: with this customer base, and we're experiencing the highest in-center spend on top of their dues. So right now, all the strategies we have implemented over the last five years
They are working individually and collectively.
Speaker Change: And so we have a strong momentum on the business and we think we have so much momentum that even if there is some macroeconomic compression, which is likely to happen at some point,
Speaker Change: It wouldn't be felt through our numbers because of the backlog of opportunity, if that makes sense.
Speaker Change: Yep, that's very helpful. Best of luck going forward. Thank you so much, Alex.
Speaker Change: Thank you. Our next question comes to the line of John Hickenbockle with Guggenheim Partners. Please proceed.
John Hickenbockle: Hey, Bahram, I wanted to start, you know, you now have, you don't lack for capital, right? So, if you think about gating factor, which is people,
Speaker Change: So how do you think about managing that, you know, higher level and then at the club level?
Speaker Change: And then your thoughts on org structure, operational org structure, and if you may want to make some changes there such that you tighten up span of control, right, to safeguard, you know, the people aspect of growth.
Yeah, it's an interesting question, John. Look.
We have, we have
Speaker Change: two elements that we have to be cognizant of. Number one,
Speaker Change: I don't think anybody's asking about our company, which is interesting because I'm sure you're not thinking this is a tech business. But I have been driving AI relentlessly for the last couple years to our company.
Speaker Change: And my belief is, if you are not implementing strong AI,
in every part of your business.
You're going to fall behind miserably.
So then that breaks down to two categories with AI.
Efficiencies
Speaker Change: and then AI as it relates to the customer experience, which is...
or Lacey, which I simply cannot wait to see.
until sometime this summer.
should we hold the investor conference to basically unveil what
Our digital platform, coupled with LACI.
Speaker Change: our Lifetime AI Companion can do for customers and how it can serve as a gateway to healthy living and healthy aging for all people.
Speaker Change: So, we are in a moment in time, I believe it's revolutionary, not evolutionary.
Speaker Change: in the next decade in how we can think about everything we do. So I don't necessarily believe that you need to have more people or more layers.
Speaker Change: to deliver the best experiences to the customer. And it's basically, you have to have a vision for what that...
Speaker Change: ultra high-end experiential delivery is and then figure out how you can deliver that most efficiently. And frankly sometimes having
significantly less layers
Speaker Change: It actually improves the customer's experience, which is what has happened at Lifetime over the last four years.
We have, like I mentioned before, which is only three.
My expectation, there is only three people to any decision.
Speaker Change: No more than three layers. More than that, you're just slowing things down and I don't think you get anything for it.
Speaker Change: So we are, John, we're in a really, really great place.
Speaker Change: Tons of initiatives internally on, you know, taking advantage of all that is happening with the technology, both on customer experience and efficiencies in the company.
Speaker Change: And then my follow-up is, when you think about the 143 visits per year,
Speaker Change: I'm not sure what the best or the most loyal members, where they're at. I don't know if they're at 160, 170, 180, but any thoughts on that? And then I sort of keep waiting, right, for the in-center revenue spent per month.
Speaker Change: You know to start to accelerate right because you've got all this traffic and you're improving DPT and other things and the wallet is there. I know you've wanted to do that organically right let let them find You know these services
Speaker Change: So do you think the potential is there, but it's going to be slow, or does anything accelerate that? Well, John, if you look at the same store business of Fourth Quarter and why we are raising the guidance again just after five weeks,
Speaker Change: It's because of what you just said. We are seeing more throughput right now with our in-centers as well as the dos.
Speaker Change: We have record numbers on PT. We have record numbers of dynamic personal trainers that they are super engaged. We have we have record amounts of applicants.
High, high-end, best-performing talent.
in health and wellness.
Speaker Change: wanting to come join Lifetime because of the strength of our brand and our position.
Bahram Akradi: So, I expect we grow dues, and I expect we grow incentives. Yeah, if I could just add to that, just to back up what Bahram said there. If I look at...
Bahram Akradi: just PT comparable revenue for Q4 this year versus last year. This year, that metric is nearly triple.
Bahram Akradi: So, it's not a small thing, and again, those are in our comparable stores, so really large growth there. There's two things that I mentioned in my remarks.
Speaker Change: that we aren't interested in hyping our business as you guys know and you call me a sandbagger I appreciate that John but we we don't want to give
Speaker Change: some sort of a hype to the investors or analysts about things that might happen. That's not an engineer's mind.
Speaker Change: Then we can give you guys some, I expect by the summer, we can show you guys again, not only the growth of that digital, the digital has grown from zero, this is not existing members, so that if you take our members using the app,
Speaker Change: That's probably a million and a half, a million and six total members on that eight hundred and some thousand memberships. Put that aside, in addition to that, within a year we have acquired 1.7 million subscribers.
Speaker Change: free subscribers. We expect that number to get to three to four million by end of this year. That foundationally is helping once again make the brand reach to a much broader number of eyeballs
Speaker Change: Out of that comes some actual regular members who are coming out of that group naturally without spending any money, creating more demand for the lifetime membership.
Speaker Change: That's the biggest win, but what's yet to come is as you see the Miura roll out over the next two, three years in the clubs.
Speaker Change: In addition to LTH growth, these are additional opportunities that will continue to improve the opportunity to do more in centers.
Speaker Change: So incentive revenue. So we're, as you guys can imagine, we're not sitting on our rear end and thinking all results are good, so they're going to stay good.
Speaker Change: We are thinking, okay, what else can we do for our customer?
Speaker Change: to make their life better, to create more of a one-stop shop.
Speaker Change: for all aspects of their healthy living, healthy aging, health tracking in and out of our clubs, even when they're away from Lifetime.
That, all of that.
has incredible momentum.
Speaker Change: And again, we're super eager to find a day that makes sense sometimes this early, you know, sometimes early summer to get everybody together and share the new things.
that are above and beyond the current business model.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Michael Hirsch with Wells Fargo. Please proceed.
Thank you for taking my questions.
Speaker Change: Just to touch on your last point there, you're hinting at an investor day or something like that in early summer. So I'm wondering... __________________________________________________________________________________________________________________________________________ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Speaker Change: Are you looking to talk about, you know, maybe updated long-term targets, or what are you hoping to accomplish with that? What I'm hoping is to introduce...
The
new opportunities.
that their asset light
that we've been working on for the last several years.
But we should be at the point.
Speaker Change: There would be no point having an Investor's Day unless we are
Speaker Change: We're not going to just have people come in here, analysts coming in, investors coming in to give them that regular update on the business moving forward nicely. That we do just like we're doing right now.
Speaker Change: is, we would be unveiling new opportunities out of the Lifetime brand.
that, as I mentioned to you, we expect to deliver
The perfect gateway for all people.
Speaker Change: on health and well-being. So that's what we are working on, and I hope that we are at a place that we can
Speaker Change: I'm fully expecting that we would announce something for first week of August, that's my goal right now, but we have to we have to fine-tune that and confirm it, but that's our expectation at this point.
Speaker Change: Okay, and then you've spoken about the LTE digital app quite a bit. So do you anticipate
Speaker Change: monetizing this app or you know beyond getting some incremental members from it how should we think about
Speaker Change: be able to help you register for any athletic events. It will allow you to track
Speaker Change: your health data. It will have knowledge of how you use the club if you're a member, if you're a non-member, and all your other activities.
Speaker Change: And it basically will become your companion by guiding and helping you on your health and wellness journey, with the expectation that we will
Speaker Change: deliver everything you would want from a streaming to on-demand podcast education, a real real companion to help you with all of your health and wellness journey.
Well then how do you monetize that?
I mean...
Speaker Change: The objective is to have something that is a one-stop shop for all people and then monetization will happen naturally, you know, as you grow, as you build the most
definitely most trusted nutritional
Speaker Change: not 50 but 80 to 90 supplements a day so I have energy for you Michael. So I want to make sure what goes in my body has gone for the last 15-20 years.
Speaker Change: But now it's under the LTH brand and the month-over-month growth we're seeing. We expect that business to be a, you know, billion-dollar revenue business in the years to come.
Speaker Change: foundation for the people to find the LTH product and be able to just easily buy it and Lacey will help them answer any question they have about any product.
Speaker Change: coupled with understanding of who they are, how they're using their, you know, how they're, all their activity levels. So all of this has been being built for the last...
Speaker Change: several years quietly. We are at a point that I think we can demonstrate this and get you guys all super excited about it.
and many more. Thank you. Thank you.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Owen Richter with Northland Securities. Please proceed.
Speaker Change: Hey Bahram, Erik. Once again, congrats on a great quarter in 2025. It's looking to be pretty great, but can we...
Speaker Change: Just dive a little bit deeper into this 1.7 million app subscriptions. I guess how do these figures compare to your club membership numbers and are they separate or overlapping?
Speaker Change: What a great question. No, that's all incremental to the club members. Those are not any customer who is paying dues to use the club.
Speaker Change: So that's that question. That number is just free digital subscribers, non-members, non-access, free subscribers to the app.
and it's just a platform.
Speaker Change: to bringing people in and give them the best on-demand content.
Speaker Change: The best streaming content, the best educational content, information on their health and wellness, you know, and on their profile is basically, it's all one-stop shop. Again, I call it...
Speaker Change: You know, my partner John Donahue called it the gateway to healthy living, healthy aging. I like that. It's basically a gateway to everything for your health and wellness.
Speaker Change: Perfect. That's clarified a lot. And then on another note, our new center opening, you know, the 10 to 12 this year.
Speaker Change: still skewed more towards those asset light opportunities versus ground up builds and then should we still expect that dynamic to shift more towards ground up builds in 2026?
Speaker Change: Yeah, you know, our pipeline is so robust right now on both fronts, like, literally it's significant, like, it's, we could do a lot more clubs.
Speaker Change: and having the right experience to the customers, right, but we, again, as an investor, I think about it. Do they have a chance that they can deliver enough growth?
Speaker Change: Of course there is a chance, it's just not probable. We have such a pipeline and we can mix and match between some of the ones that are basically going into already existing spaces and the ones we build from ground up.
Frankly, I don't...
Thank you.
Speaker Change: We should try to guide to so many of this and so many of that at any given time.
Speaker Change: Because it has no value in it. I think we really need to make sure we help the analysts to figure out a way that basically they think about the total score footage growth.
Speaker Change: and then the relative membership growth to that square footage and dues growth, etc. So, but we are, we really have significant opportunity on all fronts.
Speaker Change: Awesome. Thanks so much for the color, guys. Thank you. Thank you.
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Jessalyn Wong with Evercore ISI. Please proceed.
Speaker Change: Hey, thanks guys. Congrats on the results. Just a follow-up on Alex's question on comms.
Speaker Change: I mean, we saw accelerating of comps each quarter into the fourth quarter there, based on your comments, seems to suggest that year-to-date trend has been strong. Just curious, has comps accelerated year-to-date there? And when I think about the bull case, you know, what's stopping?
Speaker Change: the company to deliver low double comparable growth in 2025, or maybe it's just another way to think about it. What is big in your assumptions for comps to slow down to seven to 8% in 2025?
Speaker Change: Yeah, so I can take that. Yeah, our comps, to your point, have been accelerating, you know, as we talked about with Q4 obviously being the strongest, and we saw that really more strongly across our in-center businesses, but also with dues.
And, you know,
Speaker Change: We're on the do side, you know, we're lapping some of the initiatives that we had we had done over the past year or two. So on the do side, that's what you would expect that to, you know, come down a little bit. But, but look, there's there's nothing to say that there's additional growth accelerators, Brahms talked about them things that we can do, you know, to increase those, but right now where we're comfortable guiding is into that seven to 8% range.
Speaker Change: That doesn't mean it doesn't mean there isn't more opportunities. You can just always, you know, balance between giving you guys a number that is certain
Speaker Change: and then beyond that, you know, it's extra potential and we are generally extremely conservative on what we commit to.
Speaker Change: Got it. Just a follow-up on other revenues. I know it's a really small part of the business there, but it grew really well this quarter, up 32% there. What's driving that and how should we think about this line item in terms of growth into the next year?
Speaker Change: Yeah, I mean that line is going to include things like our lifetime living or lifetime work and a lot of our athletic events So that can be that can be a little bit lumpy just given the timing of events
Speaker Change: You know, we've kind of just penciled in roughly, you know, five to six percent growth. But again, that can be a little bit lumpy just given the time of year and the timing of those events.
Alright, thank you guys and good luck.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of John Boggarden with Mizuho Securities. Please proceed.
Good morning. Thanks for the question.
You bet.
Speaker Change: Maybe, you know, in terms of the next steps for growth, I'm wondering, Ram, if you could discuss, you know, a bit of the opportunities for recovery, which seems to be a topic of increasing interest for folks in the wellness space.
Speaker Change: We've seen the news of the rollout of the coal plunge.
Speaker Change: I'm curious if you can discuss your vision for the recovery space overall, where you believe Lifetime could take that, the intensity of CapEx required, and how do we think about recovery as a contributor to either in-center revenue or even a new driver for memberships growth going forward?
Yeah, it's a great question. Look,
Speaker Change: It's really an interesting business wherein the customer is in front of you going through their experiences so you can actually just observe and watch and see what are the things the customers are really interested in.
Speaker Change: We have been rolling out, all of the last couple years, a recovery space. Every new club has recovery. All the old clubs have been getting the recovery space.
Speaker Change: We are systematically putting in cold plunges into the clubs as we can roll them out and paste them out correctly depending the opportunity of each club.
We are very, very
optimistic on Miura, our longevity business. It has literally been
Speaker Change: Mayura last year but we took till September to hire the physician assistants to actually have the teams and train and have them fully trained.
Speaker Change: then deliver that customer experience that was like exceptional by September. We did that.
Speaker Change: By December, we were looking for a business that is generating substantial revenue and margins.
Speaker Change: And since then, we still, January was bigger month over December, February is growing over January, despite lower number of days, and that business is moving exactly as we had hoped.
And it proves to be a business that can long-term
Speaker Change: If it doesn't do what our personal training business will do, I think long-term that business can do at least 50% of our revenue of our personal training incrementally in our clubs.
Speaker Change: So, we are constantly digging to find out how else we can make the life of our members, their health and wellness journey,
Speaker Change: more complete so they can do more of the things they want to do related to health and wellness in one place with one trusted brand.
Speaker Change: So, I fully expect we will continue to grow our in-center revenue.
From.
Speaker Change: more nutritional products, more recovery, more dynamic stretch, more Miura and but we're not going to bombard our customer by pushing promotional nonsense.
Speaker Change: We deliver the best experiences for them, we deliver the best programs, we deliver the best.
Speaker Change: service and they come to us naturally. There's tons of companies who are trying to do this longevity things.
Speaker Change: remotely or whatever but their attrition rate is ridiculous and our attrition rate on our Miura customer is substantially below the attrition rate of our customer right now which is
Speaker Change: the best it's ever been in 32 years. So we are, we are.
Speaker Change: Really, really encouraged with the strategy that my team has put together and the execution of that strategy, and it's 100% focused from the customer point of view.
Speaker Change: We've been committed to that for 30 some years. Customer point of view. So our inventions...
Speaker Change: Our creation is how do we make your life as a member better?
Speaker Change: And then that's the results that you're receiving right now, induced growth and in-center penetration is just because of our direct focus on making that experience more comprehensive and better for the customer.
Speaker Change: Thanks for that. And then as a follow-up, coming back to the digital investments, the LACI, a lot of discussion this morning around the vision, but I'm curious what you're seeing already. The downloads have been very strong. At this point, can you parse anything out in terms of activity or engagement between members versus non-members? Maybe what features are seeing the most traffic, whether it's the online store, the health advice, any takeaways thus far?
Yeah, it's growing fast.
We are adapting it fast and we are learning.
in an incredible pace.
We would love to take the next.
five or six months, continue to
improve
Speaker Change: Not only the number of subscribers, that's going to grow significantly. By the time we see you, we hope to be at 25, 2.5 million, 3 million subscribers.
Then, we like to have...
Speaker Change: show you all the breakdown, what percentage of these people come in, how often they come in.
Speaker Change: What are they interested in? How do we incorporate LACI for them?
Speaker Change: to be completely and entirely customized to each individual subscriber with incredible AI attached to it. I am incredibly excited about it. We're working relentlessly on it.
And I don't want to speak out of turn.
Speaker Change: I think summer is when we will be able to really put on a demonstration that would be satisfactory to me.
Speaker Change: and you will you will get all these great questions you're asking we will be able to give you answers with with enough
Speaker Change: with enough data that that data is meaningful. We just, we need a lot more number of, you know, we need, we just need a lot more engagement, a lot more data, we need a lot more, so those are statistics.
Speaker Change: are legitimately accurate. Does that make sense? It's a little early right now, but the early results are amazing. That's all I can say to you.
Thanks Bahram.
Speaker Change: Thank you. Our next question comes from the line of Alex Fruman with Craig Hallam Group. Please proceed.
Alex Fruman: Hi, everyone. Thanks for taking my question and congratulations on a really strong year. Wanted to ask about your kids offering. You have a really unique offering in the marketplace for families. I'm curious if you could kind of help quantify for us how many of your members or how much of your business is associated with members who have a kids membership associated with that member and how much of an opportunity is that going forward?
Yeah, Alex, that's a great observation. It's incredible.
Alex Fruman: Part of our business, it always has been part of the strategy to create
Alex Fruman: Unmatchable environment for families with children and our kids camps, summer camps, kids academy, parents night out, all the different things we do in there are humongous.
Alex Fruman: part of Lifetime's overall success. We have never broken that information out to go ahead and pass that we of course have it but we do not share that information. We haven't. We got to be
Alex Fruman: conscientious of how many different information we share, you know, on a regular basis.
Alex Fruman: because it can honestly become confusing to the potential investors. The overall factor, things I can tell you, is that our family memberships
Alex Fruman: have the highest utilization as a utilization per membership obviously and they have the highest retention and it's it's more or less
Alex Fruman: part of the overall strategy that we laid out 30 years ago.
to create a facility that was.
their best experience for singles.
and The Best Experience for Couples.
and even...
better experience for families with kids.
Speaker Change: It's part of an overall strategy of Lifetime. Yeah, if I could just add to that, I mean, it is part, it's a big differentiator for Lifetime, but
Alex Fruman: You know, Bahram did mention we don't break out statistics, but what we can, what I can tell you is, you know, this year from an engagement standpoint, a penetration standpoint, you know, some of the camps and things we do around our kids programming, we had some, you know, record participation. So, it's just another component of the engagement we're seeing. Yeah. And most of like a summer camps.
Alex Fruman: pretty much universally are sold out. We sell out long ahead of the season starting. So when we are seeing...
Beahm.
stronger trend.
Alex Fruman: right now than last year and last year was an incredible year. So everything looks and everything is looking great Alex.
Speaker Change: That's great to hear. Really appreciate all the color. Thank you.
Speaker Change: Thank you. Our last question comes from the line of Chris Warnack with Deutsche Bank. Please proceed.
Chris Warnack: Okay, thanks. Hey, guys, thanks for squeezing me in. So my question, I know there's been a lot covered, but I don't know that we talked a lot about the
You know the the pretty recent launch of the
Chris Warnack: The online supplement sales and the in-center supplement sales and you know Bahram I think it was about three or four months ago that you you expanded the launch I'm just curious as to what how you how you look at it now if it's going according to plan or
Chris Warnack: or better and you know what what kind of next phases of growth are for that for that segment. Thanks
Chris Warnack: I believe it will be an incremental game changer for a lifetime.
and the next.
Speaker Change: two to three years, you're going to see explosive growth out of LTH. We are
Speaker Change: building the groundwork, the basically the root system for all systems for LTH to go.
But we're seeing strong like 25
Speaker Change: percent month over month, like, you know, right now, February is 25% more than it was February of 2024. But
Speaker Change: But, you know, I expect that number to get to 100%.
Speaker Change: by sometimes this year versus what we were doing the same month the year before. So it's moving a full system. All systems are go on that and it will be a huge growth factor for lifetime years to come.
Thanks, Bahram. Thank you so much.
Speaker Change: Thank you. There are no further questions at this time. I'd like to pass the floor back over to Connor for any closing remarks.
Connor: Yeah, thank you everybody for joining us today. We look forward to seeing you at the upcoming Bank of America and UBS Consumer Conferences. Otherwise, we'll see you at our next quarterly earnings call.
Connor: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.