Good morning, welcome to Life Time Group Holdings' second quarter of 2023 earnings conference call. Please be advised that reproduction of this call, in whole or in part, is not permitted without written authorization from the company. As a reminder, this conference call is being recorded. I will now turn the call over to Ken Cooper with Investor Relations for Life Time. Good morning. Thank you for joining us for the Life Time second quarter of 2023 earnings conference call. With me today are Bahram Akradi, Founder, Chairman, and CEO, and Bob Houghton, 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. 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 EBITDA, net debt to Adjusted EBITDA, or what we refer to as our net debt leverage ratio and the free cash flow before growth capital expenditures. This information, along with reconciliations to the most directly comparable GAAP measures, are included in the company's earnings release issued this morning, our 8-K filed with the SEC, and on the investor relations section of our website. I'm now pleased to turn the call over to Bob Houghton. Bob? Thank you, Ken. Good morning. We appreciate you joining us for our business update. I will briefly review our second quarter 2023 financial results, which include continued strong revenue and Adjusted EBITDA growth. Bahram will provide his thoughts on the quarter and our strategic initiatives, which are all working to grow our business, improve profitability, increase cash flow, and reduce leverage. Our second quarter revenue increased 22% to $562 million, driven by a 25% increase in membership dues and enrollment fees, and a 13% increase in in-center revenue. Center memberships increased 26,000 from the first quarter, and we ended June with approximately 790,000 memberships. Total subscriptions, including digital on-hold memberships, are now at approximately 832,600. Second quarter average center revenue per membership increased to $701, up 10% from $639 in the prior year quarter. We generated net income for the second quarter of $17 million, compared with a net loss of $2 million in the prior year quarter. Adjusted EBITDA increased 116% to $136 million. Our Adjusted EBITDA margin increased by over 10 percentage points to 24.2% versus 13.7% in the second quarter of 2022. Rent as a percentage of revenue was 12% in the second quarter of 2023, and 13% in the prior year quarter. We delivered another quarter of improved cash flow, with net cash provided by operating activities of $142 million versus $71 million in the prior year quarter. Year to date, we have generated net cash provided by operating activities of $216 million versus $80 million in the prior year-to-date period. We are incredibly pleased with our performance in the first half of this year. Our strategic initiatives are successfully driving growth in revenue and Adjusted EBITDA at sustainably higher profit margins. We are seeing a significant increase in the number of asset-light opportunities to grow our business, and we are rapidly deleveraging our balance sheet. Looking forward, we remain confident in our ability to continue delivering growth in revenue and earnings while providing the unrivaled athletic country club member experience that is unique to Life Time. I will now turn the call over to Bahram. Thanks, Bob. Good morning, everyone. I am very pleased with our progress in the second quarter towards our main objectives. Our strategic initiatives are all paying off and our team is focused and excited. We are delivering the best quality programming and experiences to our members, and at the same time, we're delivering great operating margins. We're continuing to see more asset-light opportunities to grow the company, and we're securing these opportunities. Net debt to Adjusted EBITDA is dropping at a very fast pace, and it has decreased to 4.2 times at the end of second quarter, compared to nine times at the end of same period last year. We expect this rapid deleveraging to continue in the third quarter. We have included some potential recessionary headwinds in our guidance. However, we are not seeing that impact yet. As we have mentioned before, June was the first month that our attrition rate was below 2019. We are seeing these trends now through July and August, which reflects strong member sentiment to the Life Time brand. Nevertheless, we will maintain our conservative perspective. Based on our first half financial results and despite our conservatism, we're still raising our full-year Adjusted EBITDA guidance to $510 million-$520 million, from $470 million-$490 million. This reflects an Adjusted EBITDA margin of 22.5%-23.3%. We are also narrowing our full year revenue guidance to $2.235 billion-$2.265 billion for the year, and maintaining the same midpoint, despite shifts in some club openings to later in the year. For the third quarter, we expect revenue to be $585 million-$595 million, and Adjusted EBITDA to be $136 million-$138 million. I would like to finish my remark by emphasizing the equity value in the Life Time brand. With more than 120 billion impressions annually, our brand is providing an increasing number of opportunities to become bigger and stronger through asset-light growth. We expect that this will continue well into the future. Before we start Q&A, I would like to take a moment to thank our incredible team of more than 34,000 people. Each of our enthusiastic and passionate team members plays a vital role in helping our members live healthier, happier lives. This has allowed us to extend the power of our brand and fuel the strong results we're seeing. We're now looking forward to your questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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. Our first question is from Chris Carril with RBC Capital Markets. Please proceed. Hi, good morning. Can you expand a bit more on the membership growth that you saw in the 2Q? Maybe how that came in relative to your own expectations, and then how you're thinking about membership counts here going forward into the 3Q and the 4Q, and how that's embedded in your guidance? It's been growing exactly to our expectation, Chris. We're very happy with the growth. We're not seeing any weakness in any of the trends. The memberships that are coming in, as we have told you guys, and you understand, there is zero marketing, zero promotions, zero efforts to sell. Our focus has been continuing to work on desirability in our clubs. It's working. I mean, our attrition rates are dropping. As attrition rates drop, you know, that makes the net increase in memberships much easier to attain. We're very happy with where we're at. Got it. Then, I did want to ask about the development update this morning, and just specifically, you know, what's driving that increase in the openings guidance here, I think from 10 previously to 12 openings for the full year? What's driving the confidence there? Thank you. Yeah, it's a great question, Chris. We are systematically looking to see what are the number of opportunities that are available out there for us. To our surprise, that number is nearly almost 200 asset-light opportunities. This is not building our big battleships, which is another couple hundred possible locations. On the asset-light ones, you know, we have already done about 10% of those. We've already done about 20 asset-light deals, there's another 20 in discussion. They are legit, I think we can continue to, you know, basically harvest this opportunity in the years to come, next four or five years, which allows the company to grow revenue and EBITDA at a very, very nice pace without having to add significant amounts of leverage. Actually, we should be able to continue to delever the company. Great. Thanks so much. Mm-hmm. Our next question is from John Heinbockel with Guggenheim Securities. Please proceed. Guys, let me follow on that last one, right, about sort of the expansion cadence and the capital light nature. Right. Bahram, would you think one, if I think about openings that the organization can handle, do you think, you know, that's about one a month? Right, so we settle in kind of, you know, 12 a year. Do you think the capital light piece ends up being maybe, you know, two or three of that 12? You know, or is it more than that? Then I guess the last piece, the suburban battleships. Is there a way to bring the cost of those down without harming the experience? Yeah. Actually, you know, the cost will start coming down in the next. You know, we're starting to see already the construction costs sort of starting to get leveled off. Feet on the ground with some of the contractors instead of being up in the sky. This is giving us the ability to do, John, is to sort of pick and choose which way we're gonna grow the business. With the asset-light opportunities, we can grow the revenue EBITDA easily in the double-digit levels, if we didn't launch many of the, you know, the big boxes. We are continuing to, you know, purchase the land, get the permits, get the approval, have the designs ready, and then we'll just decide systematically when to deploy the construction on those, with the, with a huge focus on making sure that we are continuing to delever the company as we go forward, growing the EBITDA and making sure we maintain the debt levels, you know, at the, at the levels that they are right now, without it going up. That will continue to delever the business. Strategically, we'll pick locations where we feel like the market is so amazing and we have pent-up demand, we'll just start construction on the bigger ones. Okay, great. Curious, your assessment of the in-center, the big in-center businesses today, right? Their recovery from COVID, obviously, personal training, you retooled, but where do you think we stand on that? I know that you talked about trying to build in some macro headwinds. Is that where it'll show up? My dues will be fine, but maybe engagement with some of the in-center businesses. Is that, is that where you think we see softness, if we see it anywhere? No, I actually don't think it has anything to do with that. It's everything has to do with our execution. Okay. We have tremendous opportunity within our control with the execution of our in-center programming. We have significant performance in certain clubs, and we have so-so performance in some others, with similar demographics, similar conditions, similar sizes of clubs, similar offering. This is just gonna take time. It's an opportunity to gradually, you know, take those places where there's significant opportunity to execute. On the really positive news, is we have, you know, continued to work on innovation, creating new ways to grow the business, and I'm really excited about what we are launching right now. It'll take a couple more months before we have at least 150 locations robustly executing, is Dynamic Stretch, which will be another opportunity for our personal training to get yet another double-digit growth within itself on a per month basis. And then beyond that, we have other things that, you know, we've been working on to basically increase the volume of revenue and the profitability in the four walls of each asset that we already own or anything that we will launch going forward. If you're standing still, if you're creating nothing and you're expecting the same business to continue to do well for you, that's gonna get tapped out at some point. Life Time has never stood still. We've constantly looked to see what are the other opportunities to elevate the experience to a higher quality, more extraordinary, and invent and, you know, introduce new programming that gives us more opportunity. The last couple of years, you know, we had to really work on all the different, you know, innovations, all the different transformations to get the company to a level where we are producing record levels of EBITDA margin from our business. At this point, I think we're just now super excited to roll out these new opportunities to continue our growth for 2024 and beyond. Okay, thank you. Mm-hmm. Our next question is from Brian Nagel with Oppenheimer & Co.. Please proceed. Hi, good morning. Good morning, Brian. Nice quarter. Congratulations. Thank you. The first I have a couple questions, but the first question, we've talked a lot about the leverage ratios and, you know, Bob and Bahram, you both mentioned leverage ratios in your prepared comments. I guess I'll maybe ask a couple parts. I mean, if I'm doing the math correctly, you know, given the guidance, the EBITDA guidance, you laid out for Q3, you know, that implies a leverage ratio in Q3 down to about 3.6, 3.7. I just wanna make sure I did my math correctly there. I guess the bigger question is, you know, how... With that, you know, how close are you now getting to that target you want to be at? Yeah. It's a great question, Brian. rough and tough, you kind of a thumbnail the guidance for the 3Q, plus what we have delivered first, you know, the first couple and then the first, and the last quarter of last year. Trailing twelve months EBITDA is, rough and tough, is looking right just about $500 million at the end of 3Q, when you look at trailing twelve months EBITDA. I'm very, very proud of our team. You know, we always have had the goal of doing a $500 million of EBITDA this year. That was the internal goal for the company, we steadily have executed. Our team steadily executed on the goal, we've been able to raise, beat, and raise the guidance every quarter. Our expectation is that obviously, you know, we're gonna grow the revenue and EBITDA again on a trailing twelve months base in every quarter, you know, the foreseeable future. You know, one way or the other, we're gonna quickly, very rapidly get the company to under three times to EBITDA. I wanna emphasize, this is with at least, you know, we know that debt to EBITDA is, you know, is a nice number, but what's really not being considered, that Life Time owns well in excess of $3 billion of fee-owned assets today, that it continues to, you know, support the strength of the balance sheet of the company. You know, we feel very, very good about getting the company under three times, and we're clearly on our way to get there. Thanks for the question, Brian. No, it's very helpful. The second question I wanted to ask, this with regard to the center of the club openings. We talked some about the delays here. Maybe I guess the first question would be, articulate a little more, like, what is causing these delays? You know, I think more importantly- Yeah. You know, how has the performance new clubs been? As I'm looking through my model, you know, these are delayed, but I think they've been performing very well, that should actually bode well for 2024, right? I mean, recognize you haven't given specific guidance for 2024. Absolutely. Everything is within our control, and then there are things outside of our control, I want to be clear. Being able to get the initial building permits to get launched, it's something that we work, our team is a professional group at that, but, you know, sometimes it's completely outside of our control, and the municipalities will take their time to give you the plumbing permit or the electrical permit, and we just can't get started. I mean, once we start, then we can go, and then once we get to the other end, we have to have the health inspectors to come in you know, through the health inspection and the building permit to get the occupancy permit. Some of those, frankly, are just completely outside of your control. A little bit of a delay on the construction, it's really a non-event situation in here. Our revenue in the clubs in the first few months, two, three months, is either a negative EBITDA revenue or slightly positive after two, three months, contribution margin positive. It really doesn't move the needle on the EBITDA. If anything, it's just a little bit of a negative, but that's already baked into our numbers. On the other hand, you look back, you know, we're gonna open, like, literally five or six, seven clubs here in 90 days, we're gonna get those all opened up, and then all of that will start generating revenue in the fourth quarter, but it's gonna generate really nice EBITDA in 2024 and years after that. You know, we're not seeing anything in here that would concern us. You know, everything is moving very satisfactory to us as a management group, and looking forward to continue to deliver the growth that we have been delivering, and the increase in EBITDA. Got it. I appreciate all the color. Thanks, Bahram. Thank you. Our next question is from Brian Harbour with Morgan Stanley. Please proceed. Thanks. Good morning, guys. I wanted to follow up just on that question about in-center revenue as well. You know, you mentioned it's kind of on you guys just to execute, but what is that, you know, specifically? Is it just like more training is required, or it just takes time to launch some of these programs? Do you think that you have to hire more to actually, you know, roll out some of those initiatives to better harvest some of that revenue? Is there any sort of capital cost that's gonna be required? You know, what specifically is it that will drive that revenue? Great question, Brian. It's actually, you know, when Before we went through COVID, we had clubs that they performed really well in the spa, in personal training, in the cafe, and then we had, you know, equivalent clubs who weren't performing as well, but they were doing okay. During COVID, you know, with the shutdown stuff, we basically had almost everything go backwards, and then as we came back with the reintroduction of the way we running the business, is much more focused on casting the real leaders in each category and getting those going. It's not just hiring. You know, hiring just personal trainers isn't gonna work. You have to cast the absolute highest quality professional trainers. Where we're able to get those secured and placed, and then support them from all the initiative from the office, we're seeing that thing. It's a work in progress. It all is growing. It's not gonna all happen at once. It's just gonna take time to roll it in. We are, like I told you, the next piece of innovation is like the Dynamic Stretch. That's gonna have a significant impact on the opportunity of each trainer at Life Time to make more money, each massage therapist to make more money. As we create a better opportunity for our team members to have a really nice living and a good income with good benefits, then we continually, you know, grab those best talents in the community to come to work with Life Time. That is continuing on. There is nothing has stopped, nothing has slowed down from that. It's just a continued progress. Again, I'm not unsatisfied overall with the growth in our game center. It's just gonna take time, but it is steadily growing. Okay. Thank you. Yeah, makes sense. Mm-hmm. Some of the asset-light opportunities you've called out, is this a shift at all in the sense that do you think you may in fact grow faster, but, you know, with kind of like the same quantum of CapEx? You know, do you think CapEx could even be more restrained going forward if you're going to kind of lean into these? You know, I don't know if this is just, if you're thinking about this differently or if it's largely status quo. Oh, that's a great question again, and I wanna just give it to you in a different form. As I've stated repeatedly, my personal goal is to get this company to a level of EBITDA that we are able to finance 100% of our growth with internally generated cash. That is basically, you know, in the horizon. You know, in the next two to three years, we can continue to grow the EBITDA significantly. Basically, with being able to do locations where there are $5 million -$10 million upfront, it's just timing. For right now, we can lean heavier on these to sort of get the EBITDA, you know, to $500 million, then to $600 million, and then as we get to the $60 million-$700 million of EBITDA, we're also gonna be able to kind of build the big battleships. Again, those look fantastic, you know, once you go through the sale-leaseback with them. They're just sort of, front heavy. We are just balancing all of this. The great news is, we have absolutely, completely under our control, opportunity to grow this narrative. We can grow the revenue, we can grow the EBITDA, reduce leverage, and then when the revenue and EBITDA has grown significantly more, we'll take that excess cash flow, and we do more of the, you know, the big battleships as well. We also are gonna continue to do our sale-leasebacks. I just want to be clear. We have no intention of ever changing the strategy of the company from asset-light strategy, but it's just, you know, we have so much opportunity right now that based on the macroeconomics, the company has chosen to take advantage of more of the asset-light ones early on, and then later on, we layer in the bigger boxes as well. Thank you. Mm-hmm. Our next question is from Robbie Ohmes, with Bank of America. Please proceed. Hey, good morning. Hey, Bahram, I wanted to sort of see if you could give us an update on how you're thinking about the continued pricing benefit you're getting. I think the average monthly dues are running around $163 now, and we're up about 15% versus last year. Can you how long can you keep growing? Where do you think the membership is gonna end up, and how much of a tailwind is that gonna continue to be for the back half of this year or next year? As I've covered that, we have adjusted the prices for the new customers coming in entirely to manage the experience we want. We have had so many clubs doing so well, that currently we have about seven or eight clubs that they're actually on a wait list. We are still taking memberships with these, but we're able to go through the wait list, call people in, and basically, you know, take these people in as, you know, using the clubs in the, you know, in the forms or the ways that will continue to help the delivery and the experience that we want. This has allowed, again, the price changes has been a function of completely and entirely controlling the experience we want to deliver, as we are an experiential company. The benefit is that when you look at what the price changes on the new member rack rate versus the people who have joined earlier with the lower dues, there is about $17 million-$18 million a month difference between if everybody who was at that rack rate, right? If everybody went to rack rate, it would be $17 million-$18 million a month. I'm glad to cover this on this call because there is no way, at any given time, that we will ever do such a thing, because that would be like a brand suicide. However, what we do have is we have a very, very, like, big supply, massive opportunity to continually pass on... a slight amount of dues increase very systematically with a complete sophisticated use of AI, where we know that it doesn't bump up the, you know, the satisfaction or the attrition rate. We can continually see some increase in the dues revenue. On top of that, even though with attrition rates dropping below 2019 numbers, we're gonna keep seeing that people, as they drop out and we get new customers coming in, that also bumps the dues revenue of the clubs. We have more clubs, significantly more clubs, doing over $1 million of dues a month now than we had before we went through the COVID. It's really... I mean, like, I wish I could sit here and report something bad, to, you know, to try to balance things out, but we are extremely happy with the way everything is working out right now. That's great. That's really helpful. Just to follow up, you know, maybe for Bob, the center OpEx was lower than we were expecting this quarter. I think it was, like, $18 million. Is that seems, you know, lower than we would have thought. You know, does that stay lower? How are you guys doing that? Also, conversely, the center maintenance CapEx, I think, was, like, double year-over-year. Was that a timing thing, or is there something going on there? Yeah, to answer the second part for Robbie Ohmes, that's just timing. I mean, remember, you know, we will always invest to protect that member experience, and that's something we'll do year in and year out, so that's just timing. As it relates to center OpEx, that's a function of the rewiring of the company that Bram and I have talked about previously, and that's sustainable. That's not a one quarter, and it's done. That's a sustainable change that we've made in how our clubs operate. You should expect to see that benefit going forward. That's great. Thank you. Our next question is from Chris Woronka with Deutsche Bank. Please proceed. Good morning, guys. I want to go back to the, I guess, the asset-light question one more time and come at it from maybe a slightly different way, which is, what's most important when you're evaluating these sites? I mean, you know, you don't want to obviously, you don't want to cannibalize your existing clubs. There's a lot of markets where, you know, that wouldn't be an issue. How do you rank, order, prioritize in terms of a number of memberships you can get, a pricing you can get, a margin? Just trying to understand, like, what drives that decision to, you know, pick the old department store here but not over here. Yeah, it's a great question. First, we study the markets, the demographics, the locations we want to be in. We decide on exactly what type of product we want to deliver and what's the best way, what is the best strategy to deliver those products and services in that community. You know, when you do the big clubs with all things in one, you know, that's fantastic. Sometimes based on, you know, the more urban markets, the geographical situation does not allow you to go buy 12 acres or 14 acres or 20 acres of land, and build, you know, your, you know, big, you know, big boxes with everything under one roof. We deliver the product, you know, in some form of assortment, and in some locations, it may be 40 or 50 or 60,000 sq ft, and we deliver some of the components of our total product, but we deliver with, you know, best-in-class in those services that we do offer. You know, we have clubs like, you know, downtown Austin, is a 58% contribution margin, so. It's only 35,000 sq ft. It just, as a network of our clubs and as part of the Life Time brand, so we have Alpha, we have Ultra Fit, we have Strike, we have. I mean, I can go on and on. We have all these amazing brands that we can choose from, and which of all the brands that we provide will properly can be represented in a market. If we feel like we've got the opportunity to assemble enough of those brands and deliver a profitable business model and service the community, then we'll just go ahead and deliver that. Sometimes they become the opportunity where you have a couple of big clubs, you know, maybe 12 miles apart, and then you have the opportunity to put a smaller one in between, and that sort of sews the whole thing together. You know, my team and I here at Life Time, we've been doing this for about 32 years. Prior to that, you know, I did it for another 10 years prior to that time. You know, we've been selecting sites and delivering different types of boxes, sizes, and all with similar profitability. You know, we're always targeting that high thirties, low forties, IRR after, you know, after sale-leaseback or, you know, if we just go into a lease. They're all depending on the situation and the development strategy can change. Appreciate that. I know we're not talking about 2024 yet, but I wanna ask a directional question, which is just to sanity check. I mean, if, if we think we know roughly the number of units you might add next year, and we layer in a little bit of pricing and in-center growth, I mean, you know, I know we're not economists in forecasting, in depth, but, you know, is there any reason to think if we just add all those variables up, that we're not gonna still have, you know, significant, however you want to define that, revenue growth next year? Is there any reason that wouldn't flow through to, you know, positive margin expansion? Just trying to get a sense. Thanks. Yeah. Look, as we... Well, let's talk about the last piece of your question, margin. I, you know, as we put out, the 22%-23%, you know, 23.5%, EBITDA margin right now is really, what I see. Can that grow? The answer is yes, but can you just go ahead and it could get little, you know, on the low end of that or high end of that? It depends on the, how many, you know, clubs will open all at the same time in a quarter or five months, and that can put a little bit of a negative pressure, and put that on the lower end of that 22%-22.5%. As those clubs ramp and go from contribution margin negative to contribution margin positive, it can push you. Just rough and tough, we pretty confidently believe we can deliver those margins going forward. As far as the growth, you know, my expectation has been we will grow the company double digits, top and bottom line, and that's our goal. I, you know, at this point, I don't wanna get into delivering any sort of guidance for 2024. With the number of opportunities ahead of us, you know, I don't have a lot of concern making a commitment that we are committed to growing the company in double digits range. Okay. Very good. Thanks, guys. Our next question is from Dan Politzer with Wells Fargo. Please proceed. Hey, good morning, everyone. Thanks for all of the color, thus far. Thank you, Dan. Yeah, I wanted to follow up on the $300 million of sale-leasebacks that you guys reiterated that you would get done this year. I mean, in terms of the timing, obviously we're in the back half of the year at this point. I just wanted to make sure, one, you know, that the $300 million is proceeds that you'll receive total this year. If there's any update in terms of, you know, the tone of conversations, how far along you are, and maybe how you think about the, you know, risk reward to the extent that rates are a lot higher now and how these conversations have progressed even versus, you know, three or six months ago. Thanks. Yeah. Great question, Dan. I am still fully expecting to go forward with what we have set forward as a goal. We have been working very methodically. My goal has been to get the company to this $500 million of trailing twelve months EBITDA range, and then kind of attack that market. As I've mentioned to you guys repeatedly, I've been working that market for years and years and years. I have no concerns about us getting sale-leasebacks done. They we're still getting inbound calls to go through with those. It's just a matter of getting that rate. I will give you guys an update on that in the next 60 days in terms of how we're gonna get those done, but we're planning to get them done. Got it. Just for my follow-up, in terms of the fourth quarter, I think the implied center OpEx, and I think you've touched on it a little bit, but I just wanna make sure I was clear. It sounds like that's gonna tick higher just as you open a bunch of new centers in this third quarter, right? I guess, were there any other variables in that guidance, like, you know, to the extent that you're reflecting that recessionary conservatism or, you know, a ramp-up of in-center revenues in the fourth quarter as you have these new centers come on? Is it just, you know, that contribution margin's gonna be a little bit pressured as you open these new centers at the onset? Everything you mentioned is, you're exactly correct, Dan. The new club openings, there's quite a few, as I mentioned. Some have been delayed a little bit here, so they're opening now, they're opening next month, the month after. We got a lot of openings. Again, all those clubs are gonna open with a contribution margin negative, you know, early on, and then it's gonna take, depending on the location, a month or two or three before they flip contribution margin positive. We have taken that into consideration. We have, as we have mentioned, baked in some conservatism for the macroeconomics, right? Finally, as we continue to execute our strategy to get more locations, executing to our standards on the in-center, those many of the in-centers are gonna spa, cafe, they all come at a lower margin than our 22%-23%. We still wanna grow those because that's the differentiation of Life Time Athletic Country Club, providing those services for the customer. They do come. They generate more revenue and more EBITDA, but they come at a lower margin. All of those are, you know, exactly what you just covered. Is all of those are taken into consideration for that guidance we're giving you. Got it. Thanks so much. Appreciate the detail. Thank you, Dan. Thanks, Dan. Our next question is from Simeon Siegel with BMO Capital Markets. Please proceed. Thanks. Hey, guys. Morning. Hope you're all having a nice summer. Thank you. Recognizing each center is a little different, just any update to how you're thinking about, like, the average, the right number of memberships per center? Bahram, just could you speak to some of the learnings you have from the growing presence in maybe the higher traffic areas like Manhattan, you and I have talked about other cities. Bob, just could you speak to price versus new members that's embedded within the third quarter and the full year revenue guide? Thanks, guys. Okay, let's go through those questions one at a time. First question again? Yeah, just memberships per center. Okay. We, you know, Simeon, we have clubs from literally, now with some of the urban ones, 25,000, 30,000 sq ft to 300,000 sq ft. I don't know that I can offer a membership per center that, you know, basically, you can just take the number of the memberships we have, divide it up by a number of clubs and try to get an average, it's not gonna help anybody with anything. As we are opening a variety of different clubs, I think we just need to sort of, you know, help you guys with maybe giving you a perspective of what we think is the right number of memberships in, you know, in maturity, what number of membership is it, you know, that we're looking for based on the pricing in a market. I don't know how to answer that without creating more confusion, frankly, because there's nothing to average out. I mean, the vastness of the variety of the products that we offer. The second question? Learning from high traffic areas like opening clubs in Manhattan. Right now, what we are seeing is the brand is allowing Life Time to get a really lift on terms of how we're processing things. We're getting a wait list established before the clubs open up. Our teams then will approach as that group, and we're getting the, you know, Our pre-sales, you know, are shorter. They're only about 90 days because we have a bigger pool of wait, so it's much, much more efficient. Pretty steadily right now, Simeon, we are able to hit the desired dues goal that we have for a club opening and exceed it. You know, more clubs are reaching contribution margin positive, faster than ever before. The learning is to continue to do what we're doing, keep pressing on and keep looking for opportunistic places to grow the Life Time brand and deliver the products and services to people. Yeah, Simeon, I'll take the last one on price versus membership growth. If you look at the second quarter, we saw membership growth in clubs that were open prior to the pandemic. We saw clubs open from 2020 to 2023 or 2022, and we saw membership growth in clubs opening this year. We've got very broad-based membership growth across all our clubs, sort of regardless of when they were first opened. Any price benefit that we see, that is due to pricing that we've already taken, pricing actions already complete. The only additional pricing we would take, it's what Bahram mentioned earlier, really done to protect that member experience. Great. Thanks a lot, guys. Best of luck for the rest of the year. Thank you. Our next question is from John Baumgartner with Mizuho Securities. Please proceed. Good morning. Thanks for the questions. Bahram, just wanted to follow up on Simeon's question. When you look at the experience you're gaining with these new rack rates and, you know, sort of addressing the overcrowded facilities and applying the AI, when you think about these new learnings you're picking up, whether it's, you know, pricing sensitivity, demographics, singles, couples, families, willingness to pay, you know, services or amenities you're offering, that sort of seals the deal and gets you that new member, that new sign-up. I guess, what's the most surprising to you in terms of, you know, the new learnings you've been getting over the past, I don't know, 12 or 18 months as you dig into this data? What we are seeing, that the customer that is interested in the experience, they are pretty insensitive to the price being $229 or $249 or $269. There is zero, you know, we can't, we cannot see any effect. That's the learning. It's just, it doesn't impact the membership units, the growth. You either have to be 100% committed to metrics, or you need to be 100% committed to deliver the brand experience that you want, and that's what Life Time has done. Our, our learning is that this is what's working, and the customer is appreciative, and I see people are so passionate about Life Time. I was just talking to one member last night. Hey, you know, my daughter basically refuses to live somewhere that is not close to a Life Time. They moved from one state to another one. When they go back, they're buying a house, close to the brand new Life Time opening up so that they can. We are going to continue to focus on what has worked, is just control the narrative around our brand to offer our customer experience. That's given us all the leverage, all the power, all the muscle we need right now. We're getting more amazing locations, more opportunities than we've ever had. We're just going to continue to execute on that. That's the learning. The learning is, you know, you can't be wishy-washy. You can't try to control, be cost conscious and experience conscious at the same time. I emphasize, you know, there's a lot of just a tremendous amount of narrative about cost of. I read the stuff coming back, people are like, "Oh, cost efficiencies, cost efficiencies, cost efficiencies." I have been like a broken record. We have not focused on cost control. We rewired the company so we can make faster, better decisions to serve our customers more robustly, with more ease and be more responsive to our lead gen roles, so they can make decisions. It's that efficiency coming from the rewired business that is structural for long term. There's zero focus on cost control, like literally zero. Our focus is 100% on delivering the maximum experience for the customer. That's the instruction to every club, every lead gen role. That's the expectation. All the inspections on, are you delivering the right brand quality for what we want? The company has never been more succinct and aligned and homogeneously working well, and we see the results of that. Thanks for that. Just, I want to ask big picture about, you know, these new weight loss drugs that are hitting the market. Your membership base skews towards active individuals and a different target market than for Pharma. To the extent, you know, you've thought about it, how do you think about the Pharma complementing your business? Does it unlock new opportunities for outreach for some of these folks who may be more active for the first time? You can integrate them with membership bases, like you're doing with ARORA, for some of the older folks that are out there. I think some of the programs, you know, personal training, the stretching you mentioned this morning, you know, that could apply. I'm curious how you think about the potential macro impact on the business from the Pharma side. Thank you. That's a great question. I think if we were purely a fitness company, it would impact us, maybe because people are taking pills to lose weight. The reality of that particular, and I won't mention any names, is that, you know, whenever you take a pill that will suppresses your appetite and you don't eat, it is eventual loss of muscle and then eventual loss of bone density. For someone to take a jump start, to lose a bunch of weight and get off of it's okay for someone to get on those things and to stay on them is absolutely long-term detriment to their health. This will become, like everything else, will come and go. People will learn their lesson with that. It doesn't impact our business. I mean, again, I emphasize our clubs are focused on a very, very, very broad social aspect, country club aspect, beach club. It's the social gathering of people. There is all the amazing small and large group classes that is people's actually network of social community get-together. The weight, you know, we have fewer people joining us for weight loss than they have, you know, that they're joining for these other reasons. It's always been the case. We're not seeing a difference in our sign-up because people are doing these, you know, these stuff. It's just, it's not really a factor. Hopefully I answered that correctly for you, but we are not concerned about it, nor we're seeing, "Oh, my God, this person didn't join us because they're taking this, you know, particular drug to lose weight, so they're not coming to Life Time." That's definitely not the case. Yep, yep. Thanks, all. Thank you. We have reached the end of our question and answer session. I would like to turn the conference back over to Bahram for closing comments. We're just appreciative of everybody and all the great questions. Looking forward to continue and see you guys hopefully in between or next quarter. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.