Well, good afternoon. Thank you all for tuning in here. So this is our, the third day of our 24th Annual Oppenheimer Consumer Growth and E-Commerce Conference. So I am very, my name is Brian Nagel. I'm working at Oppenheimer as a senior equity research analyst, covering consumer growth and e-commerce. I'm very pleased to have with us our next presenting company, Life Time Group Holdings, and two of the company's senior executives, so founder and CEO, Bahram Akradi, and interim CFO, Erik Weaver. So, gentlemen, thank you for joining us. Thank you. Thank you. Before we go, I think, you know, it's just helpful to... I've had the pleasure of following Life Time Fitness for a very long time now. I admire this company to no end, you know, both as an analyst as well as a consumer of their products, so I'm excited to have this conversation. But Bahram, I thought maybe we'd kick it off. I, you know, just to... Oh, by the way, this will be a fireside chat. I'm gonna ask questions. They're gonna answer the questions. But to the extent there are questions from the audience, just send them through the chat, I'll be happy to work them into our conversation. But Bahram and Erik, I thought we'd maybe kick off the meeting. Just, you recently hosted an analyst event. I was in attendance of the analyst event. I guess the question I want to throw out to you is, you know, what were the key messages there that you wanna make sure we continue to get across to investors and to market participants from that event? Yeah. First was that I wanted the audience to see how this management team has responded to all the different periods of time over the last three decades, and how we were able to prevail and transform the company for the better in each occurrence of an outside events, right? And I think we did a great job demonstrating the company. We're able to grow revenue and EBITDA, or the EBITDA, EBITDA plus rent, for the company on an ongoing basis. And not only that, we really looked at what was working, what was not working, what needed to adapt or transform, and we've constantly done that. I always tell investors, "If I was gonna invest in a company, it wouldn't be about the last six months or the next six months, I would wanna know how they have responded to the last two decades, three decades." So as a forward-thinking, that they know how to respond to different circumstances. None of us are smart enough to be able to anticipate exactly what's gonna happen over the next five, 10, 20 years. You can do your best estimate, but you also have to be adaptable, and we've proved that, and I think that the goal was to do that. The second piece was I really wanted to demonstrate to the world that this company is far beyond me, and we have a very, very experienced, passionate, tenured, executive and team members in the company. They love what they do. They have been here. They're passionate about our cause of trying to create happier and healthier people all over the United States and North America, and so I think that we accomplished that. Erik's job was to more or less to demonstrate the embedded potential in our existing assets, which is kind of always misunderstood. I don't think people understand how much more EBITDA will naturally will come out if you ever really draw a line in the sand and say: What about the- So there was a clean cut for us to say, "Look at everything that was open from '23, that end of 2023, how much more those, just those clubs can do in revenue and EBITDA?" And, you know, Erik mapped out for everyone, that could be $450 million of revenue and about $250 million of EBITDA. So all of those things were key. The drivers, we wanted to kind of emphasize to people that we have a wide variety of options on how to grow the company. You know, we can go into the malls, that we help transform their concept of it being mixed-use development. We can go into transformation of living, business and get a different growth vehicle there. Office change, taking over other assets not managed correctly by other operators and transform those, and then the normal ground-up. But, you know, what we kept getting questioned is how, "What's the return on this? What's the return on that? What's..." And the reality is, we wanted to prove that we can deliver north of 30% IRR on every new invested capital, net invested capital, and Erik did a great job kind of... So a lot of things that we felt like were being misunderstood, we tried to clear up during the Investor Day, and we've had amazing feedback, just like the one you gave us, Brian, consistently from everyone. People loved that Investor Day. No, it was a great event, and so that, that's a great way to start our conversation here, so congratulations. Thank you. So let me take one step back, just from a macro standpoint, then we'll jump back into Life Time, Life Time business. But, you know, one of the ways that, Bahram and Erik, I'm starting most of these conversations I've been hosting over the last few days, is just to get, you know, your perspective. So given the investor focus on the consumer backdrop, you know, given the fluidity of the consumer backdrop, you know, from your vantage point at this point, where are you seeing the consumer? Right. That's a great, it's a great question. I think part of what we transformed during the COVID is getting more users, basically having our users use the, use the product more intensely. And at 144 visits a year per membership, our customer has made Life Time a very, very big part of their life. They're not fickle, they're not... You know, if they're needing to pinch on something, Life Time would be the last thing they pinch on.... As a result of that, Brian, we're not seeing any impact. I am constantly checking with other business owners, and I hear people saying things are softer, they're not quite as robust. We're not seeing that. We have full demand for our clubs. We are seeing no resistance, and we have two, two major things I wanna point out to the investors. One, on the offensive side, is basically your advertising and promotions. We don't promote at all, we have no promotions, and we don't advertise. We spend 1.4% of our total m- revenue on marketing. That includes all branding stuff and all the team here. So we don't have to advertise. That means that there's a demand without us forcing a demand. That's important for people to catch. And then we have the best retention in the history of the company, and it's about 10% better than our best in the past. And it's still every month that we're taking attrition for two months ahead, we're seeing better and better trends. So from both offense and defensive side, what we're seeing is zero impact. Our in centers last month were literally all above forecast, for just for month of May. So we are not seeing any impact yet, and I think it's all due to all the changes we made. We made the business more robust experience. We focused on desirability for every which way we can create more desirability for the customer, and we focused on making everything easier for them to engage in. So all of those things has resulted in a pretty robust demand for our business, which may be an anomaly to the regular, you know, consumer, you know, sort of a trends that you guys are seeing. That's perfect. So shifting now more to the actual Life Time business. So, you know, again, like I mentioned, I followed Life Time for a long time, I think I know the clubs quite well. You know, one of the... When I'm talking to investors, I think, unfortunately, you know, Life Time often gets lumped into just the gym category, which I know you would disagree with. But the way I wanna frame the question is, you know, discuss the key features of your clubs, how these clubs have evolved over time. We talked about this at the analyst meeting. You know, and the key features, and then where really are as you're thinking about the club offering, where are the opportunities going forward that's gonna allow you for even better engagement with your core consumers? Yeah. So look, I think if you look at a company, like a, that is built of golf courses, country club, Life Time is more of an Athletic Country Club. It's less of a gym. You know, people are coming in because of our amazing Beach Clubs. They're coming because of the Kids Camp. They're coming in because of the basketball, pickleball, tennis. They're coming in for health and wellness services. They're coming because of, our chiropractors and physical therapists. It's not a gym, like you said, and we have been trying for 30 years to make sure people don't think of us, the same as the fitness centers or the gyms. But it's just gonna take more size and more reputation, more, more repetition. Eventually, the investor is gonna completely comes to the grips that this is not like a gym business, and it's not like a retail business. It's a healthy living, healthy aging, high-end brand that is more or less a leisure business. The difference between our leisure business and a leisure business like a Vail Resorts or a cruise or something like that is that this, people are using 144 times a year. And if things get a little rough, this will be the last thing they're gonna give up. Because it's part of their life. It's 2-3 hours on average of everybody's daily life. You know, for so, you know, somebody in that one household, 5 members in a household, they have a membership, somebody's using the club every day. So it's very sticky, and we focus on desirability. I emphasize all conversations in our company, desirability, desirability. Make sure the casting of the team members are perfect. Everybody... The programs are more desirable, the schedules are more desirable, the app is more desirable, and the more we press on desirability, the higher we see our profitability right now. If I could just add to that, I would say also, too, you think about all the things that Bahram just mentioned there, pickleball and all the things, they're not just things that people are doing, they're communities that they're a part of. So you think of our ARORA, I mean, these are communities. People are finding meaning and relationships and building this community, and that also provides that stickiness. You know, that's the perfect segue. So I wanna make sure we talk more about retention. You know, 'cause Bahram, you mentioned a moment ago that, you know, retention is now tracking, you know, extraordinarily well. So, I, you know, and we're hearing, you know, I guess you can make this point, but it's, you know, that as these clubs have gotten better and better, as the programming in the clubs has gotten better and better, that's adding to the improvement to retention. But from a financial perspective, you know, how should we think about it? Where does this better retention now translate to the financials? Yeah, it creates more durability, more reliability, more consistency. So we basically are having fewer and fewer member drop out. To maintain that same number of visits that's desirable for us, what we need now is we need less new people to come and join. So what's happening, as less people go out, more people are still wanting to come in, we're getting more demand and more wait lists. I give you guys one anecdotal club, like in Harbour Island in Tampa, which is gonna open end of this month. We have a couple thousand memberships already, and we have 11,400 people more on waitlist. So the team just called me yesterday. They've been pushing me to take the price from $279 to $329 and raise the, raise the, you know, enrollment fee from, like, $500 to $1,000. There is so much demand, that basically you can dictate... But we drive it because what I continually press on my entire team is to focus on the desirability of the product and the desirability of brand. Our goal, as you know, Brian, you and I have talked for more than 20-some years, is wanting to build a brand that is like a Disney. It's a household brand. Everybody knows the brand, everybody respects the brand, and it's the culmination year for Life Time. We're seeing the investors get it, the developers get it, the customers getting it now. I mean, I think it's just, it's all coming together. This is a really, really big year for our company because it's all coming to focus for all different groups at this point. But talking- So basically what you're gonna be able to count on is our performance. The lower the attrition, the higher the retention, the easier it is to predict the business, right? I mean, our business, the beauty of our business, so predictable, but the less you need to rely on new membership sales, right, the more predictable the business becomes. Yeah, so to that point, maybe you talk a bit about, you know, just how throughout the course of the year, but you still have pools are a big draw of your customers. To a certain extent, they do bring a seasonal customer to the business. But like Erik mentioned a moment ago, you know, with the big emphasis now, and we'll talk more about this in a bit, with pickleball and programming like ARORA, is that really helping to, you know, to smooth out that member growth, that member retention throughout the year? Yeah, it is. You know, look, I think the adaptability I talked about in the Investor Day is the key in any survival, anything at all. You gotta keep adapting. I remember in 1995, you know, I, I had the prototypes without the outdoor pools, and I hated the summer months because the... You know, right this time of the year, people think about wanting to be outdoors. They want to be at the, you know, lakes, et cetera, and the business would naturally drop down. So we went through designing these pools and Beach Clubs, enhancing that and then performing and improving it over the years. And basically now, these years, last 6 years now, the Beach Clubs are a very important part of the brand creation, number one, and also they actually make the summer months, which are the most horrible months for the club business, to become actually the strongest months for our company. Now, it's so strong that it will have actually a positive, like, it's, it builds up in June, July, August, and then we start giving back some memberships and some dues in September and October, stabilize in November, December, and then we'll build back up in January. We see that all of our effort now is what are all the things we can do to get as many of these summer-only customers to actually decide to stay on and go to, with use the Parents Night Out, or use the pickleball, or use... The more the variety of health and wellness programs we offer together, the stickier the business becomes over the entire 12 months of the year. So we're constantly working on it. There will be some seasonality left. You know, I expect you know, in our numbers, we expect a certain number of membership drop, come back in September and October, but that's all embedded in our forecast, right? Just, you know, quickly, Bahram, from a competitive standpoint, are you seeing, as you spend a lot of time looking across the country as you're opening clubs, but are you seeing, is there anyone out there doing anything close to what Life Time's doing from just a member offering? Yeah. It's you know, I've said this about 4 years ago, 3 years ago, when we were going back, going public again. If I left today, and I took the entire management team that you guys saw in the Investor Day with me to start something new, we couldn't replicate it. The embedded opportunity that we have in Life Time, the what the number of sites under development, the number of sites that are negotiated and taken, the number of locations that they have been already captured by one of these 100+ thousand sq ft athletic country clubs, they're just not duplicable. But more than that, you know, we spend $7 million a year building new formats, new branded formats that people covet. As I mentioned, you know, you take any brand, and I don't wanna publicly name somebody else's studio brand, but they come and go. They get boring. You need to constantly reinvent. We have a reinvention machine to create the next generation of programs that our customer wants to go from one to the other. When they get bored of one thing, they got other things they can do. So in order to... Let's say I went and I built two clubs. I can't afford to build Life Time's technology. I can't afford to build 150 billion impressions a year. There is just so many things that are the by-product of the last 30 years that we have been working our tails off that you just can't replicate. The number of the programs that we offer, right? Inside of 100,000 sq ft large format equivalent, it's just not feasible for a one-off to replicate. For a company that has 5 or 10 clubs, they cannot replicate that type of invention, right, and roll out of that. So Life Time's uniquely built with a huge moat around it. No less than a Vail Resorts kind of a moat. It's not replicable. At this point, I know I couldn't do it. Somebody must be pretty smart, and way smarter than me, to try to figure out how to kind of crack through what we have built. So let's shift a bit to just the growth. You know, so I think one of the key messages here is that Life Time has become much more nimble in how you're expanding, you know, your collection of clubs. I mean, and usually utilizing very well now a much stronger brand within health and fitness. So just from your perspective, I mean, just talk about growth. I mean, how should we think about, as investors, how should we think about the unit growth opportunity for Life Time going forward? Yeah. It's incredible, actually. I wanna say this to you first. Once we went private in 2015, the first thing we did is we took our real estate capabilities that you guys were able to see, from designers to, you know, vision. We basically went to, like, David Simon and said, "Hey, David, you have these malls. Here's how you can transform the mall from 1 million, 3 million, 4 million, 5 sq ft of retail to 3 million sq ft of mixed-use development, and Life Time will be the catalyst, the launching catalyst of transforming that." We went to the apartment builders and said, "You're gonna build 100, you know, 1,000 apartment units. You're gonna build 40-50,000 sq ft amenity space that costs money and doesn't work. Here is a Life Time Living model which gives you faster ramp, a higher rent per square foot, and better retention." Now we have proven all these things. We've proven the mall strategy. We've raised their traffic by 12%-13% the month that we opened versus the last year. We have proven the mall- the Life Time Living model, and we are getting more and more developers calling in, wanting to build. And you say, "Well, another gym could do it." No, they can't, because they don't have 150 billion impressions behind them to impact the ramp of that facility. So we have that. We have the landlords who got screwed by tenants, who basically said, "Oh, because of COVID, we're gonna pay you 50% rent. We're not gonna pay you full rent." And the landlord said, "Okay, if you can pay 50% rent, but in lieu of that, I want a signed agreement that I can kick you out with a 60-day notice if I can get somebody to pay full rent," right? Then we get a call from these landlords, say, "We wanna take this. We wanna- we're gonna get you in because we trust you're gonna pay our rent, and your brand is gonna help our, our asset." So we're taking those. So we have, right now, literally 100 deals in the pipeline, and there are a variety of different ways to grow, and gives us the nimble being very nimble in which, which assortment of those we deploy per given year, so we can give you a nice double-digit return, a double-digit growth on revenue and EBITDA. We can give you a 30%+ return on invested capital, on the net invested capital, right? And maintain cash flow positive. Like, everything I have ever dreamed of getting Life Time to, it's here right now. I mean, this quarter, as we've committed, we're gonna deliver free cash flow positive after growth capital, and we have the absolute flexibility to continue to do that going forward. And the incremental money coming from any additional sale-leaseback, it becomes a particular reservoir that you can recycle for even faster growth, and then when you build those clubs, you take those into sale-leaseback. So we are in a position, but in a way, I wanna explain. Our goal is to grow the revenue and EBITDA and never grow the debt, right? Keep the debt the same or lower and re-grow revenue and EBITDA. We anticipate under 3x debt to EBITDA this year and under 2.5x next year. Perfect. Just quick, I mean, you mentioned a moment ago the Tampa location you're opening has the huge wait list already to get in. But how, generally speaking, how... You should look at some of the other clubs you've opened just recently, how are they performing? Yeah, they're killing it. I mean, we are, we are seeing results where actually, like, literally so much better than the forecast, so much better than business plan. We have a lot of clubs right now, they're opening up literally within the first 45 days, they're contribution margin positive, and breaking records in dues revenue the first full month the club is operating. And so it's extremely well, going really, really well. Oh, go, go, sorry. Go ahead. No, I, I just wanted to, to Bahram's point there, the clubs are... They're, they're ramping quicker, they're reaching profitability faster. So, you know, the things that we're putting up now are just performing so well and so much better, and so we're really pleased with, with that growth. And to be clear, I mean, you know, that is, so as we look at the centers that have been opening recently, that is a combination of the, you know, the asset light, as well as the traditional openings, correct? ... It's all mixture. Yeah. I think the way to think about this is to make sure we simplify it for you, the analyst, as well as the investors, is to continue to refer to this large format equivalent. Think about 100,000 sq ft, you know, no more than $25 million-$30 million of net invested capital in that from us, and then, 30%+ return on that invested capital, is the way we can describe things, and then people don't get confused. Because the nature... You know, if, you know, we used to run a capital planning model, CPM, you know, years ago, and it was basically run for 5 years. But we used to take, you know, 10, 11, 12 of our prototypes, lay in 1 a month of those into to create that CPM. Today, there could be any combination of 5 or 6 different ways we're growing our Athletic Country Club format, and it's very, very hard to do that. So you gotta go to a simpler approach and say, "Okay, the embedded EBITDA in the 2023 class by the 2026 is this," and then you need to plan that we deploy $300 million of fresh capital for growth, and then next year, $330 million, the next year, $360 million. We add 1 a year to that sequence, and we are able to generate more than that in free cash flow after interest and maintenance CapEx. So that's the easier way to start modeling our growth going forward. So just talk about a bit about the, you know, the cost infrastructure of the company. I think, you know, you did a great job over the last several quarters with streamlining the model, you know, getting smarter with costs. So maybe talk a bit about that, and then importantly, I mean, as we, you know, we talk a lot here about the continued growth of the company, the top line growth of the company, you know, how leverageable is that cost infrastructure gonna improve at this point? Yeah, it's been phenomenal. So I wanna tell you, we have invested... We're- I wouldn't be surprised if we're not spending $70-$80 million more a year right now in programming inside the clubs. Offset, but not spending $70-$80 million in sales costs. We don't have any sales people, no sales managers, zero commissions, nothing, right? So we shifted from fluff cost into substance to give to the customer. Then, we basically are spending less money in the marketing, and we have less cost in the corporate office. The corporate office now is wired very differently than it was wired before. If we were running the business the way we were running it in 2019, the corporate office and infrastructure between the corporate office and the clubs, it would cost the company about $250 million this year versus the 170-ish that we are spending right now. The beauty of it now is that if the company goes from $2.5 billion, not if, when the company gets to $5 billion of revenue, we're not gonna spend $340 million in corporate office expense. It's basically you're gonna see more leverage coming in from on the SG&A side. We also don't need to spend any more money in marketing than we are spending right now for literally double the revenue that the company will have in some time in the future, because it's all designed by selling itself. It's the desirability and the brand. And so I see we get leverage on that, we see leverage in the corporate office, and we invest all the money in the customer experience. Perfect. So I know our time's gonna wind down in a couple minutes, so the last topic I really wanted to dive into, and we touched a little bit of raises, the balance sheet. Well, let's say cash flow and the balance sheet. So, you know, Bahram, you mentioned this a moment ago, you know, the expectation you'll be free cash flow positive here in Q2, and that's gonna prove sustainable. So I guess the way I want to frame the question is maybe discuss a little bit further the kind of building blocks of that free cash flow generation, and then how should we be thinking about the balance sheet and the debts on the balance sheet, the tools at your disposal to continue to manage that well, including sale-leasebacks, which you did a modest-sized transaction just recently? Yeah. Well, we mentioned that, and during the call, during Investor Day, we mentioned LOIs in place for more sale-leasebacks. So expect to see some more sale-leasebacks to be announced coming up soon. And then in addition to that, you know, we are working on a few other things. The goal for the company right now, the immediate short term, like the next six to nine months, is to put the company in a position we are seeking. We're seeking, as a company, a double B credit. Okay? And that may take two more quarters of free cash flow positive and a couple more sale-leasebacks, a couple more movements. We wanna ma-