Good morning, and welcome to the Life Time Group Holdings F ourth Quarter and Full Year 2023 Earnings Conference Call. Please be advised that reproduction of this call, you know, in whole or in part, is not permitted without written authorization from the company. As a reminder, this conference is being recorded. I'll now turn the call over to Dani Matzke, Vice President of Corporate Finance. Good morning, and thank you for joining us for the Life Time 2023 annual earnings conference call. With me today are Bahram Akradi, Founder, Chairman, and CEO, and Erik Weaver, Interim CFO and Chief Accounting Officer. 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 net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as net debt leverage ratio and free cash flow. This information, along with 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. With that, it is my pleasure to turn the call over to Erik Weaver. Erik? Thank you, Dani, and good morning, everyone. Before I begin, I'd like to take a moment and share how excited I am to be on the call with you today. I've been with Life Time for over 20 years, holding various roles in the finance department and have made a seamless transition into my role as interim Chief Financial Officer. We have an amazing company and a strong financial team. I'm now pleased to share our financial results. Starting with our fourth quarter, total revenue increased 18.2% to $558.8 million, driven by a 20.9% increase in membership dues and enrollment fees, and an 11% increase in in-center revenue. Access memberships increased 5.2% to end the year at more than 763,000 memberships. Total memberships ended the quarter at approximately 815,000. Average monthly dues were $183, up 13.2% from the fourth quarter last year. Revenue per Access membership increased to $711 from $640 in the prior year period, as we continued to benefit from higher dues, increased visits and increased in-center activity. Net income for the fourth quarter was $23.7 million, up 73% versus the fourth quarter, 2022. Adjusted net income was $38 million, an increase of $20.4 million versus the fourth quarter, 2022. Adjusted diluted earnings per share was $0.19, compared to $0.09 per share in the fourth quarter last year. Adjusted EBITDA increased 28.7% to $137.7 million, and our adjusted EBITDA margin of 24.6% increased 200 basis points as compared to the fourth quarter, 2022. Our strong financial performance continues to drive growth in cash flow and a reduction of our net debt leverage. Net cash provided by operating activities increased 74.7% to $132.1 million as compared to the fourth quarter, 2022. We reduced our net debt to adjusted EBITDA leverage to 3.6 times in the fourth quarter versus 6.5 times in the prior year period. For the full year, total revenue increased 21.6% to $2.217 billion, driven by a 24.4% increase in membership dues and enrollment fees, and a 15.3% increase in in-center revenue. Net income for 2023 was $76.1 million versus a $1.8 million net loss in 2022. Adjusted net income was $129.7 million, which increased by $171.3 million versus a net loss in the prior year. Adjusted diluted earnings per share was $0.64, compared to a loss of $0.21 per share for the prior year. Adjusted EBITDA increased 90.6% to $536.8 million, and our adjusted EBITDA margin of 24.2% increased 8.8 percentage points compared to the full year in 2022. We are extremely pleased with the company's financial performance in 2023. With momentum on our side, we are very excited about the opportunities in front of us in 2024. I will now turn the call over to Bahram. Thank you, Erik, for your commitment to the company for the past 20 years and for excelling at your new role as interim CFO. Let me begin by expressing my gratitude to our 37,000+ team members at Life Time. Our continued progress and success would not be possible without their passionate and relentless commitment to elevating our brand and delivering the finest member experiences in the leisure industry. We accomplish this through our innovative programming and services designed to delight our 1.5 million members across North America. I'm extraordinarily proud of our accomplishment this past year. 2023 was a great year of outstanding progress for Life Time. We achieved every one of our operating and strategic objectives while exceeding our financial goals, and our progress is continuing this year and has set us up very nicely for 2024. Early 2024 has been among the strongest starts we have ever seen in terms of member engagement, member visits, and member retention. In terms of financial goals, during 2023, we increased our revenue by over 20%. Even more impressively, our Adjusted EBITDA almost doubled compared to the prior year. In addition, a primary financial objective has been to lower our net debt to Adjusted EBITDA. We are making progress here, and we expect this ratio to be under 3x by the end of 2024. As it relates to our operating and strategic progress, we continue to elevate our brand, our programming, and our member experiences are the finest in the high-end leisure industry. The enhancements we have developed in the areas such as a small group training, pickleball, and ARORA offering, have increased the desirability of our brand and the engagement of our members. As a measure of remarkable progress we achieved during 2023, by the back half of the year, member visits in our same-store clubs had essentially caught up to the very high levels of 2019. The clubs look and feel healthy and energized, a trend that we're seeing into the 2024. With the increased demand for our membership, we have now more than 20 clubs with wait lists, and we expect to have additional clubs on the wait list by the April-May timetable. While establishing wait lists for our busiest club is designed to maintain our extraordinary member experience, it also improves our member retention. We are experiencing record visits per membership as a result of the strategic initiatives we developed and implemented over the last several years. Increased visits per membership translates into higher retention rates and enhanced member satisfaction. We expect to realize the highest retention rates in the history of the Life Time for 2024. Like most high-end leisure brands, we're not seeing any weaknesses in our demands or traffic so far in 2024. Right now, we see no reason to suggest the positive trends we are experiencing today should change going forward. Importantly, we're not seeing any negative impact on our business from the new weight loss drugs we're all hearing so much about. For individuals on such programs, exercise and strength training is absolutely vital for avoiding the loss of lean muscle mass and for maintaining healthy weight long term. We are confident that this mega trend will be particularly positive for Life Time. I will be glad to expand on this with more details during Q&A. Now, our key financial objectives for 2024 are, first, to deliver double-digit growth for revenue and adjusted EBITDA, as stated in our earnings release this morning. We're guiding to a revenue of $2.46 billion-$2.5 billion, and adjusted EBITDA of $595 million-$610 million for 2024. And secondly, to be cash flow positive after all capital expenditure for the year. At this point, we're still expecting to turn positive during the second quarter of this year. Again, we'll be glad to expand on this during Q&A. Now that Life Time's recovery is very much behind us, going forward, our intention is to issue guidance on an annual basis, consistent with our high-end leisure industry peers, such as Vail Resorts. We plan to visit this annual guidance quarterly and update as needed throughout the year. To help with this transition, we're providing first quarter revenue and adjusted EBITDA guidance, and this will be our last quarterly guidance. With that, we're guiding to the revenue of $585 million-$595 million, and adjusted EBITDA of $142 million-$146 million for the first quarter. Over the last 30 years, Life Time has repeatedly demonstrated the ability to respond to major challenges and emerge better and stronger every time. We have become a highly coveted, high-end leisure brand, and as such, our growth opportunities have continued to expand as our business has evolved. As a highly evolved subscription business, our priority is to be the most desirable brand in the leisure industry by providing the finest destinations, the strongest programming, and the best customer experiences. To track our success, we constantly measure member engagement, which has never been higher, as illustrated by visits per membership and our improving retention rates. In sum, for 2024, we look forward to continue to build upon the progress and the successes what we delivered in 2023, and the momentum we're enjoying so far this year. Thank you. We're happy to take your questions now. Thank you. At this time, we will be conducting a question-and-answer session. 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 key. Give me one moment, please, while we pull for questions. Our first question comes from the line of Megan Alexander with Morgan Stanley. Please proceed with your question. Hi, good morning. Thanks very much. Bahram, I wanted to ask about membership a bit. You know, you talked about early 2024 being amongst the strongest start in terms of engagements, visits, retention. I guess looking at the fourth quarter, where you ended from a membership perspective, it does look to be a bit below what historical seasonality would suggest. So, you know, maybe can you just walk us through how Q4 played out relative to your expectations, both from what you're seeing in terms of churn and new joins, and then what you're seeing so far in 2024? It's a great question, Megan. Good morning. So the fourth quarter was just slightly above our expectation in the net memberships. Our expectations are basically, as we've stated over and over, is focused on really trying to get the right balance of the membership so we can deliver the right experience in the clubs. Fourth quarter of this year, everything was as expected or slightly better, as I mentioned. However, we had more, and I'd like this versus like 2019, we had way more club openings in that fourth quarter that offset some of the memberships that they dropped, the seasonal drops that comes from the September to December. But everything is completely in line and, you know, again, within our expectation, except better. And then the same thing, beginning of the year. Our beginning of the year is, you know, slightly above our expectation in terms of the net membership gain, and that is truly the name of the game in our business. It's really the net membership, is how many memberships are dropping out, how many coming in, and finding the right balance there to make sure you don't over, overcrowd the clubs, you don't, you don't, you don't pinch the experiences. So, you know, we constantly manage that as, as diligently as we can do across all the different centers. Really helpful. Thank you. Thanks. And maybe as a follow-up, you know, can you just talk about the openings for the year? I think you said 9-10. Maybe help us with how many of those are asset light versus some of the more big suburban heavy builds at build-outs. And then just related to that, you know, I think on the last quarter call, you said you may need more clubs if we're doing more asset light to get to a similar revenue number. I think this 9-10 is a bit below what you've been doing, so maybe just help us understand what the offset is there. Yeah, it's just a little timing on getting the projects through the construction phase, approval phase. We actually have pretty front-loaded this year, so we have about half a dozen clubs that will open early. We have a total of about 9-10 clubs, and I think the one thing that I would tell you is that when you guys. This is the challenge that we've talked about with our business, is that, you know, it's like, just asset light doesn't mean they're smaller. Like, as an example, we have—we're opening 2 clubs this year, Harbour Island and Druid in Atlanta. These are full-size clubs. They're 90,000 sq ft indoor, outdoor tennis, pickleball, you know, 90,000-100,000 sq ft, total assets, you know, indoor plus the external, but they were asset light. You know, we got these back from the landlords, particularly from a different. They gave us nice TIs, and then we're spending maybe another $10-$15 million for each one out of our pocket. But they're not small clubs. And then there are some clubs at, like, 40-60,000 sq ft facilities. And there's a half a dozen clubs, four or five clubs that they're opening right now, early this year, and these are big clubs. These are big traditional facilities that we had started, you know, building last year, and they're just opening. So a lot as we go through the balancing of the CapEx, you will see a bunch of the CapEx last year was for, you know, getting these clubs launched. The bulk of the money was spent. Now they're just gonna open. And then we have a club like Arden, you know, Arden in Sacramento, California, and that facility, again, is a large facility, but it, again, will show up as an asset light. So asset light doesn't mean necessarily they're smaller. It just means that we got into it with less than $60-$65 million of our capital upfront before the sell-leaseback. Yeah, can I – if I could just add to that, just if from a square footage standpoint, just to add to that, you know, last year we opened up 800,000 sq ft, and we intend to do the same or more this year. So just to add to that point. Makes sense. Thank you. Thank you. Our next question comes from the line of Chris Carril with RBC Capital Markets. Please proceed with your question. Hi, thanks. Good morning. So, Bahram, maybe can you talk about some of the trends that you're seeing in your newer markets versus your legacy markets? You know, if you could touch on what you're seeing from the perspectives of revenue per center, member or visits, in those different markets, that would be helpful. Yeah. So let's talk about you know, let's separate clubs from markets. Newer clubs opening up, they're opening up with a faster ramp, the fastest ramps we ever have had in the history of the company. They're opening up, and we're pretty much cash flow positive at the center level and contribution margin at the center level, like within 60 days, 90 days. This is much faster than they used to be, on a contribution margin basis. The best results, their revenue per square foot, however way you wanna look at it for, for the asset, the average membership price, all of those are higher than the traditional clubs, where we have the legacy, large amount of legacy membership. Where we have told you guys repeatedly, while we are raising legacy prices, we don't do it all at once, and we are very thoughtful of the customer reaction to how we treat them in this matter. So, the new clubs are breaking records one after another in terms of how they are getting opened up. We just opened Red Bank, New Jersey, yesterday, with brand new records, you know, in everything. So we are really, really thrilled about the way the business is working. The older clubs, we spent significant amount of time, money and energy over the last two years in modernizing updating those clubs so they can deliver same experience and the same programming as we're doing in our brand new clubs. We spent the bulk of that money over the last 24 months, and the results of that is that they're all having their best same stores on a general and generally speaking, those older clubs are doing better than they ever have as well, and they're continuing to accelerate in their ramping. And some of them, you know, some of the older clubs are like the Westchester, Syosset, Garden City. These type of clubs are way above where they used to be, and they are doing numbers as good as all the record-breaking clubs that we are opening. And so I just really, across the board, we're not seeing any sort of a trend. Our less, you know, performing clubs of the past, and when we're digging in on those, and when we spend very methodical energy on identifying the top 25, what we do right there, the bottom 25, what we're not doing great there, and we break it down. That's where we have the opportunity in just our own execution. It's not the market, it's not outside forces, it's just our own lack of precision in execution in some of those markets, which is... Then we work really, really hard to sort of try to figure out how we problem solve. But the new business model, this is the most important thing, the most important takeaway for all of you. The new business model, the positioning of Life Time as a higher-end leisure company, having the most engaged customers that we have ever had, having the most visits per memberships that we have ever had. The new model is far superior to anything we had ever executed over the last 30 years. Got it. Thanks for all that. And then on the center operations expense, could you provide maybe a little bit more detail on what drove that lower as a percentage of center revenue in the 4Q? I mean, even lapping some of the costs, coming out in the 4Q of 2022, you were still able to see some good leverage on that line. So, yeah, hoping you could expand a little bit more on, that center ops leverage, and to what extent you expect this to continue, into 2024. Thanks. So we expect to have our EBITDA margin hovering between 23.5% and 24.5%. Now, that doesn't seem like a big margin, but it is quite a bit when you actually look at the numbers, that 1% up or down. And that's the difference in like, okay, the timing of the clubs. You open a bunch of clubs at the same time, you have a little bit, you know, you have to pre-hire everybody. You're taking all that expense. You open the clubs. So then, you know, really, we're just, we're buying a little, we're buying a little bit of buffer for that. As we get the clubs more caught up in re-ramp, so this is another super important takeaway for all of you. We were misunderstood beginning of last year. You know, as I, as I brought up to you guys and repeatedly explained, we weren't re-ramped in our clubs, and most clubs were in a re-ramp stage. Today, that re-ramping of the clubs is probably 90% done, but they're not 100% done. So you're gonna see throughout the year the impact of that catching up. So this, this levels of EBITDA margin, this 24%, give or take 0.5%, is where I would recommend someone to target in their modeling. I wouldn't go much higher because, you know, sometimes we do deliberately decide to make additional investments to make sure the, the experience will stay top-notch. And so we, that, that's really where what I can tell you. So I don't, I don't see a particular shift in anything we did. It's just naturally the business caught up, you know, more dues coming in, as the clubs are re-ramping and producing. Now, we're spending more money, as I mentioned to you guys, and we will continue to spend more money on programming, on pickleball pros, pickleball leagues, small group classes. We're adding. We're paying more to the top-end stars that what people love to follow. So we're gonna continue to invest to deliver the highest experiences. And then the opposite of that, of course, when you're delivering that, you end up clubs on a waitlist. You have the ability to charge exactly what you need to charge to make sure you can get the right experience in there, and the margin will come right through. Great. Thanks so much. Thank you. Our next question comes from the line of Alex Perry with Bank of America. Please proceed with your question. Hi, thanks for taking my questions, and congrats on a strong quarter and finish to the year. I guess just first, can you talk about your pricing outlook, especially in light of, you know, a large amount of clubs being on wait list? What is your expectation on where pricing could go versus the $183 of average monthly dues you ended in 2023? So I'm gonna start. I'm gonna give it to Erik and Dani to chat about this. You know, they run the forecast and updates all day long. So you should kind of think about it in two major categories. We have done the bulk of repositioning for our company over the last couple of years, and that means, you know, we needed to move the clubs out of the middle-level price point, get them to the high end, and make sure the experiences matches, and to make sure Life Time homogeneously is a higher-end leisure brand in an athletic country club space. Most of that is done. The next piece is, we know we feel a little pressure on the club utilization, and at that point, you know, all right, do we add another $10 a month or 15, 20 dollars a month to the rack rate? We're almost forced sometimes to add that price to make sure the club doesn't get overcrowded. And then, you know, the way we're managing it now is we basically quickly put the club on a waitlist, and then we can manage the waitlist, manage the sign-up, and then we can say, "Okay, now maybe we need to go from $249 to $259 or $259 to $269." So that's really... I would say the bulk of it is done. The new changes to the rack rates, new rack rates, would be modest changes going forward, necessary by over demand, you know, right? But it will be modest. Then you should expect, because of what we have told you. When we told you guys middle of last year, we have about $17 million difference between the customers who are not paying the rack rate. If all of them paid the rack rate, that's $17 million a month. We're never gonna take that all at once. We're gonna, you know, just bleed that in so ever slowly. So again, the customer experience is not like we're gouging them or we're, you know, we're taking advantage of the situation. So that's gonna come in, but some of it with the churn, when somebody drops in at 182, the next person comes in at 220, 230, that's going to continue to kind of lift a little bit. And then, the other piece of it is there were small legacy price increases. So I expect we see more like, you know, typical year, not 2024. We will have a still, because of this tail end of the re-ramp, we will have a bigger same-store, but going into 2025, 2026, 2027, I expect a 3%-4% same-store growth opportunity, just as this pricing thing just work its way through the pipeline, if that helps you at all. Yeah, that's incredibly helpful. Then my follow-up is, I just wanted to ask about the strategic initiatives. Are there any new strategic initiatives we should be thinking about to increase member engagement beyond what you've already talked about? You've talked about pickleball, small format group training. You started to talk about a new food offering or MIORA. Just any new strategic offerings that we should be thinking about that should help drive 2024? Thanks. Yeah. So the everything you're thinking about 2024. So we are doing sort of a revolutionary change like we did with DPT, with our food. Our food was really playing... We were, as I mentioned to you guys, we played offense coming out of COVID, and but we didn't play offense in our food. The food was playing defense. It was unimpressive. I was, for the most part, and I don't want to say this is across all the systems, but generally speaking, a very uninspiring, very boring, and just kind of defensive actions. And that was the 2024 initiative. We just launched beginning of this year, so the freedom and creativity, we're allowing the clubs to, you know, kind of pro, you know, test, provide, suggestions and offers. We're having a really, really enthusiastic launch with this. It's gonna take months and months and months before you're gonna see meaningful material numbers, but I expect, you know, we're doing, you know, 10, 15, 20% better on our F&B by the back half of the year than we're doing right now. We're seeing the lift start, but it's gonna be kind of slow and gradual. MIORA is a huge opportunity for particularly Life Time. We have exactly the right customer base in our clubs, and one of the mentions, as I mentioned, I wanted to expand on, was the weight loss drugs. This is not. This is going to remain a mega trend. It's gonna stay. It's not, it's not for. It's particularly not, only it's not a negative for exercise because you absolutely need to combine the proper weight training and nutrition with these drugs if you want it to work. They will stay. But just like everything else, it's a tool. People can use the tool the wrong way. People can use the tool the right way. If they use the tool the right way, the exercise business is gonna get a win out of it. However, Life Time is particularly in the right spot because our customer is paying $200-$300 a month for their membership. The weight loss customer is spending $500,000-$600,000 a month on this drug. They are gonna want the right professional facilities and professional personal trainers and nutritionists to help them with the augmentation of the big investment they're making in that. Some of these people would feel uncomfortable going to clubs initially. Now that they get a little head start, they lose 15, 20, 30 pounds, they get more comfortable coming in, and not only that, they also start seeing, "Hey, shoot, I am losing weight, but I'm also becoming skinny fat," to put it mildly. Then they really have all the elements needed to go to a right place. And then Life Time is uniquely positioned again, because we have many locations in every market, we have facilities where we can launch MIORA clinics for longevity, for addressing this weight loss trends, the peptides, all of that. There's also regulations against that. There's a lot of people are trying to do this online across states. You know, the expectation is that clearly you're gonna have to visit the doctor in your states. And again, we are so perfectly suited with the facilities we have, the clinics, that they're already embedded in almost every market we have at least one or two facilities that have built-in clinics in them. So we look at this as nothing but upside. Perfect. That's very helpful. Best of luck going forward. Thank you. Thank you. Our next question comes from the line of Brian Nagel with Oppenheimer Company. Please proceed with your question. Hey, good morning. Good morning. Nice year. Thank you so much. Erik and Dani, welcome to the call. Thank you. So I've got a couple questions, I guess, more quantitative in nature, but, you know, Bahram, we, we talk a lot about, and you mentioned again on the call today, you know, the plan to get to free cash flow positive for the year starting in the second quarter. Can you just go through, and I know this may be a bit of a follow-up to one of the prior questions, but just the building blocks of that. You know, particularly with Life Time still here in 2024, you know, still pursuing a relatively aggressive expansion plan. But how should we think about the building blocks to get to that free cash flow positive in Q2 and beyond? Yeah, yeah, Brian, this is Eric. I can take that. So, I mean, you know, as we kind of mentioned, our adjusted EBITDA, call it $600 million, right? We, you know, we expect probably about another $130 million for debt service, and then you account for our non-cash rent. That, that's gonna get us to about $500 million of cash before CapEx. So that's gonna give us, you know, $500 million of capital to deploy. And in our pipeline that we have planned, that shows us, that, that gets us to that free cash flow. That pipeline is gonna deliver that double-digit, top and bottom line that we talked about. So, it is math, and the math works, and we've got it planned out. So the $500 million he's mentioning, you know, we'll probably spend roughly 150-ish, give or take $10 million-$15 million of that in modernization, of our facilities, CapEx for technology, et cetera, right? And that leaves, call it $320-$330, that can be purely applied to future growth capital. And when you start thinking that, you know, some of these assets are, you know, kind of upfront leases, where we're getting some, you know, TIs, and then we put some of our capital in. You know, for those type of clubs, I would put $10-$15 million in on average. If we take a club—if we build a ground up for $65 million, take it back to sell leaseback at $50, now we still have $15 million. It's just upfront loaded. This is really important for all of you guys to sort of understand the beauty of our position right now. When we have the clubs that are committed on an asset-light basis to a landlord, they have a certain expectation of when they're opening, they're providing their TI, we're putting the money in. We're pretty much locked in, but the good news is, the investment is small. When you look at the ones that we're doing ground up, that which is $60-$65 million of upfront spend, and then going to sell these back, now, the 100% of control of that is in our hand. We own the land, we own the construction company, we're the GC. We can decide exactly when we wanna start that. So our commitment to you guys is that, hey, we're gonna deliver double-digit top line and bottom line, and we're gonna manage this amazing cash flow. And then, again, I mean, next year, we're gonna generate more than $320-$330 million, that will allows us to deploy more capital to for growth. So we feel really solid about what we're telling you here. Is that helpful? No, it's very helpful, Bahram and Erik. So let me—one, that's helpful. Let me ask another question, or I guess it's a follow-up to that. But, you know, so first, we've been watching the business sort of, say, develop, evolve, you know, out of the COVID crisis. You know, we talked... You mentioned this, I think, in your prepared comments, Bahram, about the, I quote, I call, refer to as a slack, you know, the, you know, the kind, the, the ongoing, ramp, re-ramp, so to say, in these clubs. But you look at the centers now, you know, the, and, and forgetting or putting aside for a second the, you know, the, the new centers you'll be opening in 2024 and beyond. What's still the incremental EBITDA? So again, and I'm asking this with perspective here, you've been, for all intents and purposes, blowing away your EBITDA expectations, you know, for the last several quarters now. But as we look at the base of centers now, what do you view as the incremental EBITDA that could come as a result, you know, come just from the centers you have now? Yeah, you know, Brian, this is probably one of the most astute questions that any investor, any investor should ask and then get the full detail and really model this out. But really, the way we look at it, and when we went private with how the private equity shops looked at this, okay, how many clubs do you have? If you don't, if you complete what you have under construction and don't build anything new, what will be the EBITDA? You can, you can sort of rough and tough, back of envelope, accept about $100 million-$150 million of incremental EBITDA that will come if you ever stop development and let everything that is left completely mature out. That's, that's the kind of a missing link in here in people calculating rate of return. The way that Eric, Danny, and I are thinking about this as we go forward is to provide you guys: hey, here we have, you know, X amount of dollars deployed at the end of 2023. We expect it, you know, at maturity, give it two more years on all of that investment. We expect the return to... You know, we expect this level of revenue and EBITDA on that bucket. Now, we're gonna spend $400 million, I'm just giving this as an example, $350 million-$400 million of new net capital, you know, this year, and this much, including leverage, whether if it's capitalized rent or whatever, and then you can expect this such and such revenue and return on that over the next three years. So that's the way we need to kind of translate our business in the future, so that this piece is not misunderstood. But roughly, $100-$150 million of incremental EBITDA would be if we just... You know, the clubs are opening, let's say, by the first half of the year. Let all of these clubs mature, you can add, we can add that number. It can be $700-$750 million of EBITDA. Yeah, very helpful. Congratulations. Good luck here. Thank you. Thank you so much. Thank you. Our next question comes from the line of John Heinbockel with Guggenheim Partners. Please proceed with your question. Hey, Bahram, wanted to start with, can you talk a little bit about the pipeline? And I know you look at, right, the battleships, the takeovers, urban, residential, and suburban mall, right? You think about those four. What is the pipeline of projects that you're looking at look like, right? In each of those four. And is the idea going forward that you sort of want to do 50% capital light and maybe not so much projects, but well, I guess projects. 50% capital light and 50% not? Capital light, is that the idea so that you spend $500 million or so in total CapEx? Yeah, it's a great, great question. So look, here's what I believe. I'm right now currently in discussions, you know, for sell-leaseback with certain entities. And there is a couple different ways to answer your question. I wanna be full detail on this. So we have at least 10 sites that are under contract, land paid for, permits are in process, so we can start the ground-up facilities. And I wanna start changing the term from battleship, because what happens is people think that if we take over a 120,000 sq ft club and an asset-light basis, it's no longer a battleship. So let's just talk about ground-up versus non-ground-up. Yep. So when we look at the ground up assets, there is currently, and in the past, how we've done those, is we have bought the land, we've built them out, we've spent 60, 65, with today's dollars, $70 million to build them out, and then we take out, you know, $45 million, $50 million, $55 million of that and sell-leaseback, you know, after the club is open. We also have had situations where the land, our landlord has said, "Okay, we will, we will buy that, you know, 60 days after you're open." They have a, you know, binding LOI. They'll take it from us, you know, when we, when we are able to pay off all the, all the, you know, bills and get them clean lien waivers on that. The other way to get them done is to actually just do like we put up $10 million, they put up $50 million, we put up the last $10 million, and we have a structure that is sort of a some mixture of a lease upfront and go forward. We're working on all these different options, but we have, in a pipeline basis, John, we have enough deals in the pipeline that we can start as many as those that we want and we need to accomplish our goal. We just literally have 100% flexibility there. Yep. On the other side, it's a little more opportunistic. Now, I am gonna be, after today, after all these calls, meetings, et cetera, gonna be on the plane flying out for a couple of days. I'm looking at assets. Two or three of them are things that we can take over. We can spend some money, remodel, and launch. And then there are, you know, we're discussing, you know, people. Office building is another market where it's another huge growth opportunity. You have a new office building, you know, you have to revitalize this thing. You need a game changing. You can't have your own little fitness center in there that nobody goes to. You need a branded experience inside of that, like people need the branded experience in the high-rise apartment buildings. There are just enough deals in discussion and pipeline, John, that I do not see a scenario where we cannot deliver 10 clubs a year and 800,000-1 million sq ft per year. That's the way I see it. Now, the makeup of that, you know, I don't wanna tell you it's gonna be this makeup or that makeup, because then it looks like we, you know, we said something, we did something different. I think you can expect about 800,000-1 million sq ft of new assets coming online per year. And, the return on them is all pretty much the same. We target high 30s as our IRR on our net dollar invested. So if we, after sell-leaseback, gets to the same number, and if this leased upfront rests with target, we're looking at a 35%+ IRR on the dollars we invest. That's great. One other question or opportunity, I think. So you look at in-center revenue, right? You think about wallet share, right, with your premium households. I mean, how do you think about growing that? Because I... There's a big opportunity to do that. You probably-- there's some holes, but I also think you haven't marketed it aggressively, I don't think so, to those existing households. So how do you attack that, and when? Yeah. Listen, if you have something worth purchasing or service worth taking, our customer will do it. So it's our own lack of execution when the customer isn't buying from us. So to just illustrate that to you, you know, as I'm taking through the top 25, bottom 25 clubs in execution, I'll give you an example, a cafe. Some clubs are selling, you know, $30 a customer, some clubs are selling $6. So if we're selling $6 a month per customer, what we're doing is we're just making sure the customer doesn't walk into that cafe. We are turning them off. The service is slow, the food isn't exciting, it's not thrilling. But then we have examples like Miami Falls or West Palm Beach, where we are delivering the right experience, and the numbers are just dramatically different, right? So the. But the only thing I can tell you is that you can sit back. I'm proud of my team. I want you guys to understand. We got hit by a tsunami, a hurricane, and a tornado all at the same time at 2020. It's been a sequential and methodical progress. First, we had to get the traffic and dues in. Then we had to work the next most important thing, reinvent our personal training. In January, we had 2,500 applicants for our personal training department versus 1,100-1,200 the year before. It takes time to build a brand for the customer to come. So we fixed PT. PT is on a great progress. We're having record weeks right now as we're going forward. Now we're working on cafe. The cafe will take, as I told you, from beginning to end of the year. MIORA, and then the other area we have not done at all, even a thoughtful job in the past, is our shop, is what we actually package experience we provide for people buying Life Time branded clothing, LTH, nutritional products, et cetera. All of that now has been bundled up under one superb executive of the company named Kimo, and his team. We are working on that. Again, I wouldn't go change the numbers, John, for next quarter or the quarter after, but I expect us to deliver, you know, sort of an incremental revenue opportunities through our shops, through MIORA, through cafe, through spa. We have enough tailwind this year to deliver the numbers we delivered. We just gave you. What we gave you and guidance for the year and for the quarter, that's just the tailwind of the things we have done. It does not require the implementation of the things I just mentioned to you to get those numbers. But we want to get those things rolling so we have enough momentum into them by the fourth quarter this year, so then we have set ourselves up properly for 2025 and going forward. That's really the way. We have tons of opportunities yet left in our own execution, I emphasize. You know, we do a lot of things great, and we have a lot of opportunity to improve our execution, John. Thank you. Thanks. Thank you. Our next question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your question. Good morning. Thanks for the question. Maybe, Ram, I wanted to ask about the digital strategy. You know, the digital on a whole really bottomed out in 2023, it seemed. I'm curious how you're thinking about digital as you're gaining visibility into the post-COVID world, post-COVID activities. How are you thinking about digital engagement at this point? Are there tweaks to the strategy going forward? Is there a need to invest or manage differently in regards to digital? Thank you. That's a great question. We are diligently working on our execution there. The goal is, if you look at the digital companies that everybody thought they're the messiahs of the world or the game changer, you have to take a look and see where they're at today. And, you know, the reality is, you know, I don't think that's a sustainable business. However, providing digital option to all of our customers is a must, and so therefore, we are 100% committed. There is massive initiatives in line. If you look at our app today, it basically provides everything from podcasts, the best content, the best information. It has best on-demand sort of exercises and a very, very robust streaming and everything else you would ever need. So what we haven't done yet is we haven't decided to kind of robustly market that, and create the, the kind of, I would say, the two options of the one that they pay a certain amount a month, $3 a month, or the freemium option. For Life Time, this is the by-product of what we have to do for our access customer. So we have every option. So if we choose to take this thing to where we have millions and millions of incremental subscribers, that they're not paying anything, but they have access to our brand and some of the, the content, and then they can do other things. They can shop online with us, et cetera. That's within our decision bandwidth, and I can... I'm not gonna expand more on it. All I can tell you is, obviously, you should expect we're thinking through all these things, and at the right time, we deploy the right strategy. Thanks, Bahram Thank you. Thank you. And our last question comes from the line of Simeon Siegel with BMO Capital Markets. Please proceed with your question. Thanks. Morning, guys. Nice job, and I hope you're all doing well. Thank you, Simeon. So, Ram, really great to see the increased engagement stats and the retention was fantastic. Could you quantify that at all? Like, where are we now for retention versus pre-pandemic, to your point? And then how does that play into general membership expectations for the coming year? Maybe what are you expecting for membership growth embedded in that full-year revenue guidance? Thanks. Yeah. Those are two, again, very astute questions, Simeon. First, the biggest indicator of the desirability we offer is that we our customer wants to stay, right? So I had been surprised in the persistence of a higher attrition rates than 2019 in 2023, early half the year. That was just the, you know, 2022 was way higher, despite the fact we don't have sales, we don't have promotions, the customer joins on their own merit. But then we saw that number just consistently come down. This is the attrition rate. And now from here going forward, we wanna refer to this as retention, which is basically it's the inverse of that number. So, in the back half of 2023, we start seeing, you know, kind of beating 2019, very nicely beating 2022. But now we are projecting potentially in the 90% range of 2019 and 80%, of eighty-ish percent of 2022, 2023. So, you know, when we go this year, we can have attrition rates that could be almost 20% better than last year. So these trends are right now... Again, attrition rate, Simeon, is a couple of months ahead. So right now, if you came in today, and, you know, put your notice to drop your membership, you're effectively an April attrition, right? So we can see that number forward, and the trends are very, very solid. I expect us to... The big number for me, the big BHAG is, we'll end up the year with 29-something attrition rate, which would be the historically best attrition rate in the history of the company ever. Great. What was your other question? Membership? How are you thinking about...? Yeah, yeah, exactly. Yeah. Just within the So I think the reshuffling of the business, you know, I think we are within the last, honestly, last 10% of the re-ramp, and therefore, I think from here going forward, I don't expect the membership, you know, we—I don't expect to give up memberships to get the dues, if you know what I'm saying to you. So we expect to see a modest membership gain on a regular basis going forward for the year. That's great. Thanks, Bahram Okay. Best of luck for the rest of the year. Thank you so much, my friend. Thank you. We have reached the end of the question and answer session. I'll now turn the call back over to CEO Bahram Akradi for a closing remark. All right. I just want to thank all of you guys for your very, very, you know, diligent Q&A and care that you have for the company. I am grateful to all of our team, as I mentioned early in the call, for their passion and their commitment, and we're looking forward for a great year. So hopefully, we're looking forward to having you guys in just about 60 days again, and continue our progress forward. Thank you so much. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.