Good morning! Let me turn that mic on. Good morning. Good morning. Great to see everybody. Thanks for showing up today for Life Time's Investor and Analyst Day, a really special day. We are thrilled and excited to have you here. So before we get to all the good stuff, gotta have a guy like me come on up here and talk about some details of the day and get that going. My name's Eric Buss. I'm an Executive Vice President and the Chief Administrative Officer. I've been around for 24.5 years. I'm gonna round up to 25. I'm the longest direct report to Bahram, 23+ years. I've got a special merit badge for that, and along the way, I've been the company's general counsel when we went public in 2004, and I was the company's CFO when we went from public to private in 2015. So I love the place. I've spent my whole career here before, a stint as a public accountant and a lawyer, and I couldn't imagine any place better. And I'm so excited to be up here starting today to show you guys what's truly an amazing company. 'Cause what I would say to you is amazing companies create great investment opportunities. Let me say that again. It's so profound. Amazing companies create great investment opportunities. And after today is done, I am confident in one thing, I'm reasonably optimistic about another, and I'm hopeful about a third. I'm confident when you leave here today, you are all gonna know and say, "Wow! Life Time's an amazing company." I'm reasonably confident it's not gonna snow today. I will caution you, in recorded Minnesota weather history, the only month where it hasn't snowed is July. So Charles Barkley might be kind of right, but I'm reasonably confident it's not gonna snow today. And here's what I'm hopeful about. I'm hopeful that 25 years from now, when you're sitting around with your grandkids, you're gonna say, "I was in Minnesota when the Wolves won Game 5 and went on to become the first team to overcome being down 3-0 in an NBA series." That's what I'm hopeful about, okay? So let's get it going. Here's some of the exciting stuff. We have forward-looking statements. Of course, we have forward-looking statements. There are some things that could happen that would make those forward-looking statements not happen. Those are identified in the risk factor sections of all of our public filings. We also have some non-GAAP financial measures that we're gonna use today. We have a thorough reconciliation of all those non-GAAP measures to their most identifiable GAAP statistics. Those are in all of our filings as well. Please look at those items and understand that those risks and those pieces of information exist. Okay. Lots of defined terms, too. All right, here's how we're gonna spend our morning. We've got a bunch of topics that we wanna talk about, and we know you wanna hear about. We've got great images, we've got wonderful videos, we've got great voiceovers. We've got tons of beautiful things to show you how great Life Time is today. What we have on this side of the list, everybody, is a group of amazing people. They exist everywhere in our company. We've got folks that have been here 29 years, down to somebody that's been here 6 months. 29 years to 6 months. The commonality across all those people is they are energetic, passionate, driven people that want nothing more than to succeed. They're not actors. They're not reading off of scripts today. They are standing in front of you as real Life Time employees who love this place and love serving members and being great team members. We didn't cherry-pick people. This is a representation of our whole population of 40,000 team members. We have amazing team members, and they're gonna tell their stories today, and we're gonna give you the information that's gonna lead you to the conclusion that Life Time's an amazing company. We're gonna have a Q&A section at the end of the time today. I'd ask that you follow these rules because we're webcasting, of course, and to make sure that your question can be heard, we need to get you a microphone. We've got folks set up for that period of time. When the presentation's over, Bahram's gonna come back up front. We'll take whatever questions live or on the WebEx to make sure that all your questions get addressed, but let's follow that process so that everybody can hear them, and we can get everything recorded. Okay. So, as I said, you're gonna see tons of images today: people, places, programs, amazing financial numbers, et cetera. Some really cool videos. We're gonna start with one right here to tell you where Life Time is today. I know you've all been to the clubs. You've walked around, you've seen it, you've been following us, but we've got a video here that's gonna say, "This is Life Time today. This is the best version of Life Time." This is a great place to start, so here you go. That's where we are today. So now that you know where that is, you're gonna hear today where we're going. But the best place to start is to talk about how we got here. What was the company's history to get us here? What were all the great things that happened along the way? What were all the challenges that happened along the way? What was the innovation, the adaptability, the resilience? How did we got here? Well, there's really no better person to tell that story than the guy that founded the darn place, and who's been here every step of the way. The guy that's single-handedly responsible for driving the passion that is all across our organization. So why not have Bahram come up here and tell us how we got to that spot? Here you go, Bahram. Yeah, thanks, Steve. All right, thank you for being here. We're gonna have a great day. I'm gonna go fast, so my team gets more time to spend with you guys. The start of Life Time, the idea, the vision, the creativity, the passion that you guys will see throughout our people, this has always been envisioned from day one. Today, what I want to share with you guys is what... In the next 15, 20 minutes, I wanna give you guys a full history of how we have gone through the last three decades. Over the last year and a half, two years, I've taken more investor visits than I would ever wanna admit in my life. But, you know, we went public a second time because of necessity. It was important to get the cash flow of the company established after COVID, and I'm proud of our team, and I'm proud of being public at this moment in time because of how our team delivers. But a lot of times when I go to these meetings, when I sit with you guys, everybody wants to know about what happened the last six months and what's gonna happen the next six months. And truly, if I was gonna invest in the company, that's the last thing I would be concerned about. What I would wanna know is how they have endured the last three decades if they've been around. Sometimes you guys all get so excited about companies who show up, you know, all of it over, and then you think, "Oh, my God, this is gonna go to $100 billion." Some of them do, most of them don't, because you don't have enough history. So today we're gonna spend 20 minutes of history, so you guys can really think through how the future may play out here based on the history of the past. So you're gonna see throughout the day, these words up in here: the vision, the creativity, the innovation that the company comes up, the resilience of this team, and of course, the adaptation that has to take place for a company to survive and prevail. All right. So what was the genesis of Life Time? At the time we envisioned this company, there were really just two types of clubs in the country. There were super high volume clubs. They focused strictly on selling. They sold the contract. They wanted to get you in. They didn't care if you ever used the club. It was a non-use model, and it was just all about selling, nothing else. No quality, virtually none. Maybe a little, but nothing. And then the other clubs were larger format clubs, mostly owned by one club operator, two club operators, very regional, and they were maybe charging at the time $100 a month. That was the sort of the high end of the market, 110, 120 dollars a month, but they didn't have the right engineering, the right design. The clubs were extremely inefficient. So they had bottlenecks in them, so they would pretty much can operate at a very low volume to deliver this quality that the owner wanted to deliver, and therefore, they never able to build multiple and scale that. So the opportunity here was to basically create a facility and expand and a destination that, first and foremost, people wanted to go to, and it would deliver both the high volume and high quality. This would serve as an opportunity to build a real business on, because you could build something that would work and you could scale. Having worked out since I was 14 years old, I knew something for certain, and that is the modality of exercise. How you achieve your fitness goals right now and the next 5 years will change. 5 years from now, you wanna be doing something different. And so if you're gonna design a club for the times to come, you need to have flexibility. You need to design it, so you can adapt it. We also can read the next 3 years, 4 years, 5 years if you're super smart, but I don't know that anybody knows what the next 20, 25 years will look like. So I wanted to design a facility that it could serve us 2 ways. If we had to go super high volume, we had designed this so we could handle a big volume and charge lower prices. And if we wanted to go super high quality and super high price, it had the quality that could actually deliver that experience as well. And hopefully, as you've gone through the clubs, you've seen both. You can see high volume and high quality in action. Flexibility and adaptability, remember those words. Okay, so during this whole time, we stayed committed, very committed, to member points of view. From the get-go, everything was designed, everything, every experience, the way we interacted with people, membership agreements, everything was designed from a member point of view, everything, and still is today. And every one of our team member thinks member point of view every day on every issue. Yet, we have continually delivered our commitment to our investors. This is what you're gonna see. We're gonna we have broken this down to about six or seven particular periods that you will see. The first period is, of course, the initial period, so about 1994, where the first club that you guys saw, Eagan, Minnesota, opened. And then all the way to 2004, which was, we went public for the first time. That club in Eagan, Minnesota, has delivered what we had expected out of it every single year and more, with exception of the couple, two, three years that we were shut down. Otherwise, it's always outperformed. Off the back of that club, we built another 36, and then we went public in 2004, and from 2004, 2005, till 2008, we basically continued on the success of those initial prototypes. We built another forty-some clubs. Some of those were a few of the clubs that you guys might have visited, like St. Louis Park or Eden Prairie, that we actually took over from other failed operators. They could... You know, they had built them, they couldn't operate them, bought them, sell these back them. They couldn't pay the rent. We worked with the landlord directly. We never bought them; we never paid for it. Landlord gave us big economics to take those lower rents, as well as capital, and it was a phenomenal deal. We just took over those clubs, rebuilt them. When we take over a club, then it's not ours. I know this question has come up: how does that work? We deliver the same exact experience. When we take over, we have a full plan. We go through every detail to how to deliver all those incredible programs that you see delivered in that, and comes together in a way that delivers the Life Time feel. So we, we had a big success during this period. Clubs grew. Financial results, you can see, is consistent, continues to go on, and of course, we get hit with the Great Recession. At this moment in time, we have opened 12 clubs, basically, in 2008. It was street expectation is we're gonna open 12 the next year. We, of course, we had a goal of doing a few more, and many of those clubs are in development pipeline, under construction, and as you guys can appreciate and imagine, the money stopped. At the time, we were generating about $175 million of free cash flow from our operation for the growth, and we were spending $475 million-$480 million to build these clubs. So the extra $300 million would not exist at this moment in time. Everything shut down. So, the other two things that happened during this period... This was one big, big issue. The other one was the arrival of all these boutiques in 2010, 2011, which, in regards to both of these issues, what I heard from investors is that, "You're gonna go bankrupt. You're not gonna be around. You're not gonna make it." So to the first one, where they told me in December of 2008, that, "You're gonna go bankrupt," I went home, I called our CFO, and I said, "Mike." It's his birthday, by the way, today. Mike Robinson. I said, "Mike, we're gonna be cash flow next quarter. So how are we gonna do that?" I said, "How many clubs are you telling people we're opening?" He said, "Now I'm telling them 6." I said, "No, we're opening 3." We made a hard pivot. We made a commitment in December of 2008 to be cash flow positive the next quarter, and we did exactly that. We adjusted our growth. The beauty of our ownership of our real estate, construction department, architecture, is we have control. So we took control of that. We took the company to a cash flow positive state immediately, and then we delivered two consecutive years of positive free cash flow. Okay. Again, the moral of the story is for you guys to understand that we will adapt and pivot as necessary to build a long-lasting company. Then there was this idea, oh, my God, no, you're not gonna survive. The studios are gonna kill you. Nobody's gonna go to the large format clubs anymore. Everybody's just gonna go to studios. Well, that's an overstatement as well. So we invited about 500 of our people to Twin Cities. We had an event in the convention center, and we went through the programming revolution. We came up with more than a dozen amazing brands, and team executed. We branded those experiences that you would wanna find in the best studios, and better, but not by one, by a multiple, offered under the same roof, the great, great experience, for the cost of one of those classes. So what happened? That's what happened to our financial results. Same thing. So in 2014, unfortunately, just kind of right now, the stock was undervalued, and it was undervalued, undervalued, undervalued, just hovering around $40 a share. And we had a shareholder activist who basically took a position and called, and contrary to the advice of all of the bankers and lawyers, I told him to call, come visit me, and then invited him to stay at my property for overnight. He said nobody's ever done that. Took me about 2, 3, 4 weeks to wrangle him and put him in a sideline and let him know that if he needed, if he did, if we did something you don't like, then call me. But he was in a great shape, then we had a unsolicited offer for the company. And we explored the idea of taking company through an OpCo, PropCo exploration. During this time, the value emerged because, like today, everybody's worried constantly, and we are committed to get the debt to EBITDA under 3 and then to 2.5x. But what's underappreciated is that there is about $3 billion worth of real estate sitting. It's not like some assetless company having 3x that EBITDA. We have assets, real estate assets, that completely supports that debt by itself. However, in this case, once we'd announced the OpCo, PropCo, the stock jumped from $40 to $55, and then the solicitor came back in, raised the offer to $70 a share. At that point, I told my shareholders and my board, I said, "it's really the price that we need to examine. We need to get other people involved to make sure the process honest," and the company went private at $72. Okay, during that period, the company continues to perform. So we go to the next period, which is really right after we had gone private. What a great time! During this time, we were able to focus on new ideas, new innovations, new opportunities, and one of the first things that I was told by one of my friends, Brian Mayer, here, sitting back there. He says: "You know what? You gotta focus on these malls. These malls are all having trouble. They're losing hundreds and hundreds of big, big anchor tenants. They need a solution." And I'm like: "Brian, I can't just go sit in one of those ugly buildings. It just destroys my brand." He kept pushing, and so I went to think tank and came up with a big, huge concept. If you guys went to Edina, if you go to some of these malls, what you see is that we came up with a solution for the mall owners. If you imagine these malls, like Edina, they're sitting on about 100 acres of land, give or take 20. In the most amazing demographics, they generally have a ring road. They have amazing setup with the cities in terms of having ability to build all different types of real estate in there. They can be resi, they can be office, they can—they have a very, very appealing zoning. But they were caught by this problem that they have these anchors, the anchors have all these controls, and everybody thought this is just the end of the malls. That wasn't true. So we took five malls, one for David Simon, Simon Properties, one for GGP, now part of the Brookfield, et cetera, et cetera, Macerich, and we'd actually designed a transformation for each of those malls. How over the next 10, 15 years, they could transition from just the retail to 1 million, 3 million, 4 sq ft to 3 million, 4 million sq ft of mixed-use development. And positioned Life Time as an anchor, would bring in about 3,000 visits a day, with a very, very high demographic customer to become the new anchor for these malls. Well, that process worked. PJ will give you more detail on that. We also looked at the apartment business, where they basically build these apartments, they put in the amenities, but it never works. Nobody ever goes. They have no programming. It will never work. They can do whatever they want, but... So we basically came up with a Life Time Living concept. You guys will see some example of those deals. And we also came up with Life Time Work, which is an elevated Class A execution of shared office space. Executed some of these, went through the execution of those, came up with some amazing opportunities, not only with the malls, but also properties like One Chicago, Stamford, again, or Coral Gables, and PJ, during his real estate section, will give you way more detail on all of these. Okay, during this four or five years of 2019, we, TPG wanted to take some capital out. They suggested we add some debt. I said, "Absolutely not. We will raise the money. You can take some money out." We raised $880 million, $680 of it was secondary, $200 primary on the secondary piece. Based on the what price per share that we came in in April, in June of 2015, by this time, it was about 25% IRR, so they're extremely happy. The company still prevailed and performed. Next phase is the most unimaginable situation I call... If you had asked me what is the worst thing that can happen, if you ask me today, what's the worst thing can happen without another thing like that thing coming? I would tell you, "Oh, maybe next year we'll have a little less growth than I want." That would be my most ugly nightmare. We'll still grow, we still grow revenue, we still grow EBITDA, but the idea that we get shut down, revenue goes from one month of $150 million to zero the next month, unimaginable. The most important thing for you guys, so that you're not afraid of viruses. Our business was record-breaking in December, January, and February. COVID was around, people were talking about it, it had zero impact on our business, nothing. It was just the government shutdowns and restrictions, and there were hundreds of them. Okay, so our idea here was, okay, defend our team members. We had, again, 30-some thousand team members. We are a family, we love each other. You can feel it when you're in our clubs. You're not gonna feel it in many businesses, and it is special energy inside of Life Time that you cannot replicate, so we're committed to preserving that. So immediately, myself and the rest of the executives stopped payments immediately for ourselves. We committed to pay our team members until the government comes up with their plan of what they're gonna do, and then we took the proper actions after that. We focused on all defense. We shut down real estate, we shut down everything that we could shut down to play defend the balance sheet, and we basically focused on getting to the other side of this event, whenever that is, and come up with paths on how we're gonna go forward. So, this, it wasn't one event, I want you guys to understand. There were hundreds of events. They were open, shut down. We started opening the first club, Oklahoma City, you know, in second or third quarter of 2020, and then some openings, then shut back down, then more restrictions, and we were not really able to operate freely and correctly till April of 2022. Okay, so during this period, what we did is we basically went back to: what are the things we love about the company? What are the things we wish we would have done differently? We kept everything we loved, and we changed everything that was dated. So selling memberships with a lot of promotions and lots of salespeople, you coming in, you try to check the club out, then you get 25 phone calls the next couple of weeks. That hammer close is, was my creation. I created that for our company, and I hated it. By the time we were at this moment in time, I just, the last thing I wanted for our company. But we had the opportunity now because all of these people have been furloughed, and they had found other jobs. Instead of rebuilding, we decided to go clean. We made complete changes in the rewiring of the business. We took layers of red tape out of the company, made the decision-making faster. We changed every single thing, and what we looked at is how we can emerge exactly in the shape we would wanna come out of it. And I am proud, and the team will explain that to you as we go through, that it is truly the best version of Life Time and the one I admire the most, and it's all due to my people. They are doing amazing work here. So we looked at pickleball. There was a huge opportunity. I played for a couple hours, and I'm like: This thing is gonna be the fastest-growing, not only the fastest, but the most participated sport in the country. It has all the elements. We had the unique opportunity to take a bunch of basketball courts and tennis courts and be the largest provider overnight. We did exactly that. We took a bunch of great programs we had, added MB Three Sixty to it, packaged it into a signature program, made it much easier for the customer to engage and get amazing experience, increase the subscription. So we focused on the larger population of the 55+ and said: How can we create healthy and happy, but most importantly, happy and healthy? For a lot of these people, having something to do in a community, that makes them wanna get up out of the couch and move. So this program, and my team will go through, has been amazing success. We looked at personal training. When we went public, I remember telling some of you guys, "I don't believe PT is gonna come back." Because a lot of the personal trainers, good ones, had gone and started their own deal. People were training people with an iPad and sending workouts, and really, what I envisioned is: Okay, how can we come up with a program that makes it absolutely impossible to be delivered over digits? T hat was Dynamic Personal Training. This was a brand-new innovation. The idea was, when I train you, when Ryan trains you, it's just like you hitting back and forth with your tennis pro. It's completely, 100% interactive, cannot be replicated. We built a brand around it, and team will go over amazing success, record-breaking every month after the month before, right, month after, and I'm really proud of my team here, and we invented Dynamic Stretch. During this time, you guys can see that we had the period of shutdown, but the recovery, based on all the moves we made, has been pretty robust, and at this point, I feel like we're completely and entirely financially gone past. 2024 is a critical year because when you draw the line atop of all these slides, if you took a line here, 2024 actually will be above that line, so basically we wiped COVID out, and I'm proud of this team for what they've accomplished. They stuck together. They worked hard. There was no, "We can't," it was always, "How can we?" The results is amazing. So, I'm gonna turn it over. I'm gonna invite Jessie Sifko and, Steve Larson, both here. They'll introduce themselves and give you guys why we're the best version of ourselves. Great. Thank you, Bahram. All right? Thank you. Thanks. Take the clicker? The clicker is for you. Thank you. Word of warning, if Bahram invites you to play pickleball, please deny that 'cause you'll regret it. He is really passionate about pickleball. Thanks, everybody, for being here in person. I know a lot of you could have done this via webcast, so you being here in person means a lot, so thanks for coming today. It was a pleasure to meet probably half of you last night at Rare, so I got a good feeling for who you are and what you consider to be important for Life Time as we go forward. My name is Steve Larson. I'm the Senior Vice President for Club Operations. I've been here for 29 years, I think the same year Jessie was born, yes? Give or take. So I've been here a long time. I started with Life Time, and I'm still with Life Time for a couple reasons. One, I'm really passionate. I'm a self-professed nerd or geek on all things fitness, nutrition, kinesiology, and helping people live happy, healthier lives. The other reason is our team, and Bahram mentioned it. The team that we have is unbeatable. I would call it bulletproof. We're full of a bunch of either ex-athletes or all competitive people who aspire to be great and really to produce excellence in everything we do, okay? Additionally, I have a Life Time family, so my wife worked for Life Time for almost 15 years. Both my kids, now fully grown and adulting on their own, thank God, but when they were young, they were part of the Kids Academy, so they checked in every day. As they become older, they started working out, and eventually they became Life Time team members. My son worked in operations. My daughter worked in the cafe and actually supervised the cafe for a couple of years at Minnetonka. So I'm truly one of those guys who has Life Time in the veins. It's deep in my DNA. And I can tell you, to buttress what Bahram said, I've seen Life Time through its full evolution, right? I started that first club that he saw or started in Eagan, and I've seen a lot of highs, a few challenging times, too. But I can tell you, there's never been a better version of Life Time. Yeah. Jessie? Thank you for being here. My name is Jessie Sifko. I am the Vice President of Training and Studio, which just basically means that I co-support the best performers on the planet, which is nearly 8,000 people delivering amazing classes at every level in a lot of ways. I've been with the company for two years. I was a 20-year entrepreneur, a self-proclaimed never-gonna-have-a-job-for-someone-else person until I met Bahram Akradi, and the last two years have been some of the most amazing and passionate ability to be on a team like this at a time like this, post-COVID, where I personally believe that health and wellness information and education is the absolute necessity of people across the world. So excited to be here and talk to you about why we believe Life Time is the best it's ever been and getting better. Yes. That said, I wanna talk a little bit about some of the results that we've achieved. For the vast majority of my career here, I've been focused, Bahram has been focused on a lot of things to deal with how we acquire members in a really efficient way. So promotion, pricing strategy, calls to action, right? What's the most effective way to gain new members? And I'm here today to tell you, over the last five years, that has completely changed. We spend literally zero time talking about promotion or pricing. We're firm believers that if we can elevate the product and create true desirability and an elevated experience for our member, the athletic country club experience, we could charge literally whatever we wanted, right? Within reason. But we've spent all of our time today talking about how do we create those elevated experiences, how to create member experiences that are not just memorable but create brand advocacy, right? So where they're going out, evangelists for us, to help build that brand. As a result, you can see, we really strive to have highly engaged members. We know that highly engaged members visit more often. They spend more money in our centers. They're much less likely to cancel, and ultimately, they become our marketing engine. We don't have to pay external marketing sources; they become our marketing engine. So as you can see, we've significantly increased the visits per year, 108 same quarter last year, 138 this year. That's resulted in the best retention rate that we've ever seen. I've been around, again, almost since the beginning. We've always had to worry about what's our attrition rate, what's our retention rate? These days, we don't talk about it because if we do the right things on the front side, the back side takes care of itself. You know, and how do we keep those members highly engaged through their lifestyle from 90 days to 90 years? It's simple. It's not easy to do, but it's about casting a vision and having the best team delivering the best people programs and places to create an athletic country club experiences. As we know, fitness fatigue is real. Bahram talked about that. Boutiques, you know, emerged, and, you know, what happens when you don't wanna go in and do that exact CrossFit workout again? You're left to leave, cancel your membership, go south. You don't wanna do that yoga class anymore. Well, what's amazing about Life Time is that we attract the best people in the right role, and then they have a multitude of options as to how they can deliver. So someone in a career that wants to evolve and change and shift has the opportunity to deliver a lot of different options to our customers. We believe that casting and scouting is the number one thing that keeps us alive. You put the right person with the right heart, the right passion; they're creating a better member experience automatically. So the programs that we are offering are coming from a different place, and the health and wellness game is about heart and soul. You can have the best places and the best systems and the best ideas; if the people aren't delivering a connected experience, and the change in how someone feels as they enter is not being created, they are temporary. So the people is at the essence of this. We've just done a scouting event or an audition event rather, for New York City, and we opened it up to anyone that wanted to coach or instruct or teach at a Life Time in New York City, now that we have these eight clubs. And what was amazing about this was that the proof that being at Life Time has never been better came in that less than seven days, we had 170 people sign up- Yeah - to audition for 2 minutes to potentially get a second audition to be. We had to shut it down because frankly, we didn't have enough time to be able to take in that many people. That was an amazing demonstration of how our best strategies, our best people programs is coming to life. You know, we've set up spaces for our programs to innovate. It's the number one reason why I'm here, as mental health and performance has become the next pandemic. Bahram invited me in the space to be able to create a brand for us that brings mind, body training in a high energy way to our customers. So our ability to innovate in our same spaces is a big secret to our success. And lastly, we will build the most beautiful spaces, and they get better and better. PJ's gonna talk about our architecture and our design, and how that really sets the stage and tees up the people to do their purpose work, creating life-changing experiences, which is why Life Time has become such a instrumental part of people's lifestyle, not just their workout. What Jessie talked about, although we do build beautiful spaces, so no disrespect, PJ and design team, what really the magic is, and I invite you guys as you visit the club today, is our people. We spend a lot of time and energy talking about culture and how we build the right culture. We're firm believers, if our people buy into what we're selling, right? And if they truly buy into our mission and helping people live happier, healthier lives, we will win. So I invite you, hopefully, you get a chance to visit Chanhassen, and I know some of you are in Edina. Go visit, interact, engage, and interact with some of those team members and see if the proof is there. I think you'll find it is. Okay, so this is our ecosystem, and in my words or in my view anyway, this is our unfair advantage that we have over virtually every competitor in the fitness space. We have products and services that literally nobody else can offer in the whole ecosystem. We have competitors in one or two spokes of the ecosystem, but there's nobody out there who has the full complement of services that can provide a full, healthy way of life, service reality for these folks. That works whether they're in person, if they're in our club, engaging with a program or performer. If they're on the road, like you folks, we have an incredible digital offering, which allows them to still experience all the best of our performers and programs in a digital setting. Pickleball, so Bahram talked about this earlier, and he talked about some characteristics that we have, and there were six across the board. For me, the one that sticks out the most, and the most important characteristics that I would want to convey to you guys, is our ability to adapt. The adaptability to changing market trends, to consumer demands, to what they wanna see, to what they don't wanna see, and we're gonna talk about four initiatives today. We probably could have picked 40, but these are the four that we think resonate most with our members and we're most excited about as growth engines as we go forward. So Pickleball, if you've watched the news in the last year and a half, you know, is the fastest growing sport in the U.S. The consumers are engaging at this at a much faster rate than we can even build the courts, and we've built them very fast. We went from zero courts, as you see, to 478 same time last year. This year, we're approaching 700, and the member participation, which we, again, is member engagement measure for us. The more butts on seats, or in this case, shoes on court, the better. 7.4% last year, 10.7% this year, and that's increasing every single month. The Pickleball, for us, is our highest engagement or the fastest rising engagement sport that we have in the club. Last year, 700,000 participants; this year, 1.2 million. We are really in a unique position when we had this. We knew Pickleball was coming. We saw where the puck was going, and that it was gonna be a huge, opportunity for members to play, and we were the only ones really to take advantage of this thing. Ideally, because, one, we had the resources, we had the courts under roof, that in our mind were underutilized, so we rededicated that space for Pickleball, and the results are just undeniable. We just opened seven indoor pickleball courts in downtown Manhattan at Penn Station. So for any of you that travel in and out of New York City, it is a sight to see. It is quite fun. On May 4th, we had an amazing event with Andre Agassi and four of the top pickleball pros on the planet, huge brand partnerships, and, honestly, it was just a fantastic and fun event. And he is a brand-new pickleball player, post having an ankle surgery. I can't tell you how much fun it is to hit that paddle and smash somebody on the other side of the net. So if you get a chance to smash somebody on the other side of the net, the Chanhassen pickleball establishment is incredible, it's right across the parking lot. Our second initiative is our signature brand. This is our small group training. Think of this as our boutique killer, right? We are the omni boutique. Under one roof and one membership, you can do Olympic lifting, you can do functional strength and conditioning, you can do tread programming, you can do a peak athletic performance, and you can get high energy, mind body training, mobility, functional strength, and meditation. You know, when you get a fatigue or you have an injury, or you're pregnant, or any season of your life, which inevitably is gonna shift and change, 'cause everything is temporary, you don't have to leave a Life Time, you simply have to open another door. We are really all about connectivity, right? So instead of selling, we just connect you to what you want next, help you to continue that healthy way of life in a multitude of ways defined by you. I love this because obviously this was the number one reason why I came in. I was a multi-boutique owner and a multi-brand owner, and I gotta tell you, COVID was a stomach ache that never went away. The need to be able, and like Bahram said, like, we didn't take checks for two years. We paid our team, we kept going. We kept trying to find the reason to get somebody in. The fight that is necessary to be able to maintain somebody a long time for that retention nearly kills you, right? What's amazing about being in our space is that we're continuing to evolve and adapt what we offer. As boutiques come and go, or people want something different, we just get a different piece of equipment, or play different music, or do different lighting, or open up, you know, a different way of doing the program, and that's what's really keeping us ever-lasting. In just the last one year, we've gone from 20%-25% member penetration, which means one out of four people walk into a Life Time to be able to experience these boutique-style brands, this high experience, energy, people, community. That's really what keeps us going, is that fitness is all about community, coming together, being inspired, and being accountable to something that you can't do on your own, which is just like Steve and I, and the team being here together. Being at Life Time for me was about being a part of something bigger than I would've ever done on my own at a time that health and wellness is going to explode and get to more people faster. So, super excited to see that over the last 1 year, we've gone from 800,000 to 1.4 million participants in just these classes. One more note on small group training, 'cause this really was a game changer for us when we brought it out. In the past, if you go back five years ago, this was an add-on for us. So if you wanted to participate in these programs you're looking at, you'd have to pay an additional fee on top of your membership. We decided it makes more strategic sense, and for a lot of my friends who worked out at CrossFit or Oranget heory or a competitor like that, it was game changing. Our value proposition doubled overnight when we did that. Now, members, for their same monthly fee, can go participate in any of these programs, and I would argue much better than some of those independent competitors I just mentioned. Yep. DPT, Dynamic Personal Training. So Bahram had covered this briefly. Training's been around since I've been around, right? It's nothing new, we've done training forever, but COVID really was a watershed event for us. It made us evaluate to say, "Is this still gonna work fundamentally as a business in the future?" as [Pia] talked about. There was a belief in the industry that it had changed forever, that people were gonna get all of their coaching or through a digital coach, through an online program that was prescribed to them. We didn't believe that necessarily. We thought there's always gonna be that need for personal connection and that one-on-one engagement with your trainer, that only that face-to-face engagement can bring. So we really spent the last 2+ years fully reimagining what training is, and reengineering the actual structure of the workout program itself. As a result, we've seen significant increases in a lot of the metrics that you're looking at today. The one I'm most proud of, and I think speaks the most to how we've built the brand, is the number of applicants, right? There's trainers out there, independent, for other chains all over the place. In the past, if you look back a year ago, we had about 3,300 applicants in Q1. This last quarter, almost 6,000, and Ryan in the back, the VP of training, will tell you the impact, the reputation, and just the gravitas, if you will, of our Dynamic Personal Training as a brand, has grown exponentially. We think there's huge upside here as well. You know, and our fourth initiative is something that we're really passionate about, and it's really all about the stories it creates. ARORA is our program that matches 55 plus as a pro-aging, right? This is a social and physically active community, and we know, scientifically proven, we also know it just feels good, if you are happier, you are automatically healthier. And so as this population aged, right, boomers started retiring a long time ago, you know, they needed other activities. So in a healthy way of life, this is not just taking a class or doing yoga with people that look like you and have the same issues or conversation styles that you do. This is about coffee club, and walking club, and dance night, and Steve- Bingo night! ... favorite, bingo night, on Friday. My favorite. And it's about bringing people together, which is ultimately incredibly healing and attractive, which is a huge piece of our retention. You know, we've gone from 30 through 338,000- 545,000 because of the stories that we're creating. As Steve alluded to, the brand advocacy that we have for our members that have amazing experiences, they walk out and tell their friends and their friends, it's absolutely incredible. You know, some of the ARORA stories that are heart-touching, are people that have been able to walk their son down the aisle, and pre-ARORA, they wouldn't have been able to have that experience, right? We've had people that have lost their partner or their spouse, despair, hopeless. Because of ARORA, they were able to find hope through friendship and activities that got them out, right? All the way to people that had never actually felt this good in their entire life, and now they're 60, 65, 70, and they actually are moving and feeling better. From everywhere, from just getting by on that survival wing, all the way up to thriving, simply because it inspired them to try again. The stories are really what we are talking about with these four initiatives, the life-changing events that happen inside of these clubs. I teach classes every single week, and I gotta tell you that, there's nothing more fulfilling than being able to add just a little spoonful of value to someone's life, to remind them that they can keep going. This program is close to our hearts, like everything, but I think these stories, altogether, really tell something really special about who Life Time is today. Yeah. As a club operator for almost three decades, I will admit transparently, this is a constituency that we just didn't do a great job of serving in the past, and it was truly blue ocean for us. And I think we are 10%, captured 10% of the potential possibility for this group. As you know, America is aging. Nobody wants to get old. Everybody wants to optimize the age that they're at, and that's really what ARORA is all about, so we are just starting on this one. You know, and altogether, the results have been our free, organic impressions have doubled over the last five years. And we're gonna bring up Jason Thunstrom, our Senior Vice President of Communications, to fill in a little bit of color as to what and why we think this is happening. Thank you so much, Steve and Jessie. You teed this up nicely. Senior vice president, as you mentioned, I remember my interview with this guy in 2002. In fact, it was so passionate, I was at a press conference with him in downtown Minneapolis for a big event a week before I was supposed to actually start, and my employer just knew I was sick that day. Never looked back, 22 years and amazing growth. Here's just a couple of years of it, and as I would reflect on recollections or impressions, I would throw out a couple of things. First, know we use independent, best-in-class media tracking services that tabulate this for us. These aren't Life Time numbers; these are reported to us. As good as those services are, even as late as 2019, they weren't doing a particularly good job of capturing mobile media impressions, and as we all know, we're grabbing more and more content from our personal devices, including news. So that's the key thing. So the numbers we're reflecting today are a much, much better reflection of the attention we're getting as a brand. More significantly, of course, it's been our growth and expansion, including in urban markets like New York. Can't beat New York. All of the major outlets are based there. What a tremendous advantage for us and our presence there. But it's not just about geography. Our team has the privilege of taking our best-in-class experts with their depth and breadth, and we're pitching them every single day to these outlets. And then, of course, the ecosystem. You described it. We are in communications, we are kids in a candy store, pitching those things out. Nobody else has that collection of healthy way of life elements designed to help people live healthy, happy lives every day. We get to do that, and the media also is chewing it up. Finally, we change lives. We change millions of lives every day, and the stories that myself and my team are able to bring forth also generate a tremendous amount of the coverage we're getting. I'll finish with this: All of that together has put us on the map with the largest outlets. Early in my career, I would've worked, I would've begged, I would've pleaded in those first four years... a few years, to get attention from The Wall Street Journal. If I reflect on the last 12 months, we've had 6 Journal, 8 Today Show, 5 CNBC, 4 Newsweek. It goes on and on and on with People and Good Morning America, and Bloomberg, and I would say, the best is yet to come. Thanks, Jason. Thank you. Appreciate it. You know, the story really concludes as to why we believe we are the best version of ourselves today is all about the retention. People are coming in, they are staying in, they're here more often, and they are loving what they are getting out of the team. This is actually my, my favorite slide in our portion, right? 'Cause I've been around forever. And our marketing spend, just like every consumer-based business, we measure it as a percentage of revenue. And years ago, right, not too long ago, we were at 3.5%. That's what we spent in terms of, of marketing. Today, it's 1.4%. It's improving every quarter, and that's not because of one thing or two things. It's thousands of little things that add up to making a truly extraordinary experience for our members, that makes them evangelists for our brand, and it, because of that, they stay longer, right? They don't leave us at the rate that they used to, so we don't have to invest the dollars to go track down new members. To me, this is a really good indicator for, "Are we executing on our own strategy?" The answer is a resounding yes on this one. Absolutely. So the stories are king, and driving desirability through our strategy of best people first, programs and places, it's working. You know, today, best retention and more stories, more proof in the impressions, and really where we're going, which is what's really exciting about what the next team is gonna be talking about coming up in a little bit, is that we are the best version we've ever been, and still growing every single day. So thank you so much for your support, your interest in Life Time, and we, we love doing what we do, and we love being on this team. And next, we're gonna get into the data and the financial stuff that you guys love so much by bringing up Dani and Eric to give you the financial overview of where we're at. Thank you. Thank you. I didn't realize, 29 years, Steve, huh? Yeah. Yeah. I was just learning how to drive. Nice. All right. This side here. All right, well, welcome, everybody. My name is Eric Weaver. I'm the Interim Chief Financial Officer. I've been here for just over 20 years now. When I started, we had 35 clubs. My most recent role was Chief Accounting Officer, so as you can imagine, after 20 years of debits and credits, this is a nice, relaxing change of pace for me, so really happy to be here. But no, I've spent my career at Life Time building what we have today, a world-class accounting and finance department. I can speak to the just the depth of the bench that we have. Our accounting technology and reporting is second to none. I personally led an industry-leading ERP implementation, and we've got fantastic controls in place, and I know that because when we went public in 2021, of all the companies that went public, there were, I think, seven or eight in Minnesota; we were the only company that didn't have a material weakness, and that's a big deal. So we are the best at what we do. We have to be the best at what we do, so that we can serve our frontline team members who are out there serving our members with excellence, and they do that every single day, all the things that you just saw.... So, also, you know, not only just the past 20 years, but just the past five months in this interim role, I've had a chance to meet with a lot of you in the banking and investor community, and that's been very rewarding as well. So we're excited to have you here, and I'll let Dani introduce herself. Thanks, Eric. I'm Dani Matzke. I'm the Vice President of Corporate Finance, so think everything forward-looking and operational metrics, forecasts, long-range plans, and our operational KPIs. I'm a little biased, but I believe our team provides our team members and our business leaders a pretty unfair advantage because of the data and insights we are able to provide on a daily basis to help drive that experience in the club. Now, as for me, I've spent 16 years in the accounting and finance industry. I'm a CPA by trade, but don't hold that against me. I spent the last 4 years here at Life Time, and what brought me here was truly the people and the experiences, and both are truly unmatched. So today, our goal is to provide you a deeper understanding of our company that you can't get just by reading our financial statements. We're gonna cover a few very important concepts that we're asked quite a bit about that we believe are misunderstood or underappreciated. So with that, let's get started. Okay, so this one has come up quite a few times. In fact, it's actually come up since we've had dinner, and that is: how much embedded opportunity do we have in just the 171 clubs that we had open at December, in December of 2023? Okay, and why is it important? I think, you know, there's a lot of financial people in here. If we were all to go and calculate a return on assets, we'd probably get a similar number. Maybe we all have slightly different definitions of how that gets calculated, but I guarantee you, 90%-95% of us would be missing some very, very important information, and that is that embedded opportunity in those clubs. So when we get to the end of these slides, just remember the number 536. It'll make sense. So let's start with... Let's break it up into a couple of sections. Let's start with our mature centers. So as of December 2023, 141 of our 171 centers were mature. So, but in 2026, we expect an incremental revenue of $230 million-$240 million. And you say, where does that come from? And it's really two places. One is gonna be dues. So as we've talked about, our average dues rate is around $184, $185, and there is a variance to the current rack rate, and that's about $30. And so, as the lower priced members attrit out and the new member comes on at the higher rate, we benefit from that rate arbitrage, so that's part of that. The other part, as we talked about, is that engagement continues to increase, right? And so we see that across all of our programming, particularly in DPT, so we see nice growth in those programs as well, so that's part of that growth as well. Again, those are from existing centers that already have rent burden, so we expect that that would translate to around $100 million-$110 million of center-level contribution. So I know we haven't talked a lot about center-level contribution, but effectively, that's center revenue minus center operations, right? So effectively, that's, you know, directly accretive to adjusted EBITDA, is the way to think about that. So then we get to the ramping, the ramping, clubs. So of our 171, we had 30 that were ramping as of December. And as you guys know, you know, our generally, our clubs ramp to 90%-95% maturity over a 3-year period, right? And so we had 30 clubs that were in some stage. By 2026, those clubs will have reached maturity. At that time, we expect them to generate an incremental $220 million-$230 million in revenue and approximately $150 million-$160 million of center-level contribution. Again, that will be accretive to adjusted EBITDA as well. So now if you total that up and you go, okay, this is just from assets, just from the 171 assets that we already have, don't have to build another building, right? That's an additional $250 million-$270 million of effectively adjusted EBITDA. We had $537 million in 2023. It is a big number. It's not, it's not nothing. So, you know, when we're thinking about that, and we're calculating those returns, we, you know, our business is not just like a regular. You put up a target and you've got to think about that embedded in the business 'cause we don't. You can't pull that off a financial statement. The other side of that then, let's talk about capital. So obviously, we have capital in sites that are under development, but of course, we're not earning a return on those. And so we looked at that as of December 31, 2023, and we had about $350 million that was invested at the time, that was not deployed. And so we used roughly a 30%-35% return to calculate, like, if those assets were functioning and they were operational, what would that look like in terms of center-level contribution at maturity? And there again, that's about $106 million-$124 million. So, so we add those things together, that's kind of the embedded, you know, just from the things that we've done so far. I know this is on everybody's mind. The next one, I heard this a lot at dinner, is cash flow. How do we get to cash flow? So that's what, that's what, that's what Dani's gonna talk about. Exactly. How do we get to that free cash flow positive? And so we're gonna take you through what our definition of free cash flow is and how we're gonna get there. So first and foremost, we have developed a strong pipeline using a disciplined approach to capital. You've heard it, asset-light. But this is the way, this is just one of the ways that we're gonna get to generating our free cash flow. We define free cash flow as net cash provided by operating activities, less all of our capital. So let's just walk through how we would forecast this going forward. We start with our adjusted EBITDA. We back out our non-cash rent, account for our cash interest and cash taxes paid, to get to our net cash provided by operating activities. Then we account for our capital, and we think of our capital in three buckets. We have our growth, our maintenance, and our modernization and technology. So just by this basic calculation, and we'll go into a little later in the presentation how we forecast each one of those capital buckets, but you can see the path to free cash flow positive is right around the corner. Yeah, I think a couple of points to point out, that the non-cash rent is important, right? In our EBITDA, we have a GAAP adjustment that we have to make to our rent that is not cash, so that has to get added back. And so I think really it's just, you know, as we go into these various categories here, the growth and the maintenance, you'll understand when we kinda talk about the overall algorithm and how we're getting to those numbers, how those all kinda come together. But the other thing, you know, we did announce a sale-leaseback, right? And so sale-leaseback proceeds are not assumed in this particular illustration, but the idea for us, it's not to generate free cash flow just to have free cash flow, right? We're gonna take those funds, we're gonna deploy those excess funds, and drive that into growth, right? So when we say cash flow positive, it's not about hoarding cash, it's about getting to cash flow neutrality with a disciplined capital deployment approach. So this is another one, too. This actually is another one that came up, understanding our average return on capital. So let's go to the slide here. It's a little, it's a little tricky because as we've talked about, not every site is the same, right? We have different real estate opportunities at different times, different builds, and different sizes, and so it's really hard to give you guys a standard unit economic model. So one of the ways that we look at is we go, "How efficient are we being with our capital?" So what we did is we took the clubs, all of our mature clubs as of December 2023, and those being built since 2015. So that cohort was 38 clubs. Thirty three of those clubs are leased, either through a, you know, tenant allowance original lease or potentially a sale-leaseback, and we have five that are owned. So you can see from the performance of those clubs, $294 million of Center-Level Contribution, burdened by $90 million of rent and $627 million of Net Invested Capital. That math works out to a 33% return. So again, that's 38 clubs. It's a pretty representative sample. It's got... You know, we had talked about malls, we had talked about suburbans. It's got kind of that different mix in there, and so we're getting the returns that we're looking for. The other thing, which I think is, it's not on here, but if you look at that and you go 38 sites into 627, that's about $17 million net per location. So we've been disciplined with our capital in terms of being able to put up sites that are producing, and we're not spending a great deal of capital on a net basis. So then you get into, okay, well, yeah, that's, that's kind of the real estate side. How do we model the business, right? Modeling the business. Our business obviously has challenges. Unlike a retail, where it's, you know, 13 months, we do have some of the ramp and, you know, other things like that that make it a little bit challenging. So what we wanted to do is kind of provide a framework for just modeling the overall business. So the graph on the right represents our guidance at the midpoint, so everybody should probably be familiar with this by now. So we're looking for, you know, 2.515 of revenue for 2024 and 611 in Adjusted EBITDA, slight margin expansion. But if we look at just kind of long term over the next couple of years, this really represents our expectations here. From a revenue standpoint, we expect that we'll continue to grow low double digits, 10%-12%. We think four to five percent is gonna come from that fully—from those fully ramped centers. We kinda talked about a little bit of that, some of that embedded rate arbitrage. Six to seven percent is gonna come from new and ramping centers. Same thing on Adjusted EBITDA. We expect low double-digit growth, 10%-12%, with margins 23.5%-24.5%. Now, I don't wanna say that we don't have the ability to expand margins, but we just—we don't wanna guide to that at this, at this particular time. From a capital and liquidity standpoint, we're looking at 8-12 locations on average, with a net invested capital of $25 million-$30 million per location. So when you think back to the cash flow, we had growth CapEx of around $300 million. So if we're spending $25 million-$30 million, we're putting up 10 sites, you know, you could... That, that's how that math works. And then if you break down our capital expenditures, we break that down into the maintenance CapEx, which is just the dollars that we need to maintain our current assets, kinda like the break- fix. So we're saying that's around $6 per sq ft, and then we have modernization and technology. So that's gonna be things like pickleball or any other things that we wanna modernize in our centers. That's gonna be about $4 per sq ft. So we're targeting around $10 per sq ft. So if you think about, you know, next year, seventeen or, you know, 18 million, whatever that square footage is, take that times 10, that's gonna be kind of our, our goal for, for CapEx. Then, of course, as we talked about our return on capital across our portfolio, we're gonna continue to target returns in the + 30s. We've talked about free cash flow. We will be there in Q2. We've talked about our net debt leverage. We're gonna be 3x this year. Our overall target is to get 2.5, and that path is fairly clear for us. All right, yes, the ever-looming recession question. We believe we've built a fairly recession-built, resistant model, and it's based on two things here. We take a look at our current demographic. Our current member has about $157,000 of a median household income, but more importantly, that's 1.6x their respective trade area. We also know, Jessie and, Steve let us know, that our member is more engaged, more knowledgeable than ever before, that health and wellness needs to be a big part of their life, and they're speaking with their feet by coming to our clubs 12 times a year. Now, I don't know about you, if I do something 12 or 12 times a month, I'm sorry. I don't know about you, but if I do something 12 times a month, it probably is not gonna be the first thing I look to, to cut if a recession does come, 'cause that's a lifestyle change. Additionally, the past often reflects the future. We take a look at the Great Recession of 2008, we see that our retention at our highest priced clubs was significantly better than the retention at our lowest priced clubs. We also took a look at the members that we did lose during that time frame, they weren't using our facilities. So based on the past and the present, we believe our more engaged, more affluent member isn't gonna be as affected by that recession, and more than likely will not significantly impact our business. Unfortunately, we get lumped into the consumer retail category. It happens all the time. We actually were talking about it last night. We are not in that category, and actually, we should say it the other way. Instead of saying we are not them, they are not us. We are so much different than they are. They don't. So if you're going to Starbucks, you don't have this subscription that the entire family is using, and it's embedded in everything that you do. They are not us, and so it just, the fact that we get lumped in there is, we need to separate that. Another frequently asked question is our revenue mix, right? What's the change between in-center revenue and membership dues? As you know, in 2019, we strategically transitioned some of our in-center revenue into our dues. Talking about pickleball court fees and small group training. By grouping this membership together, we're providing a better, more all-inclusive membership, as well as more recurring revenue that's highly predictable and stable in nature. Now, let's not forget, our in-center businesses are still killing it. We have a higher revenue per membership in each one of our in-centers than we ever have. It's particularly strong in DPT. Particularly there, yes. Bahram can attest to that. So let's take a look a little further into our membership opportunities, our churn impact, and well, as well as our legacy price increases. So as Eric stated, we still are seeing that $30 difference between average dues and our new join rate for our members. So each one we lose, we gain a new one, spending a little bit more. Additionally, if we were to snap all of our memberships up to rack rate in their home club, which we would never do, but if we did, it would be $19 million a month in dues. Now, again, we would never do it. Our members see this difference as a massive benefit and, to be honest, a little bit of bragging rights, that they know that they're paying a lower rate than the average person walking in. But it does show that we will have continued pricing powers for years to come to help grow that same store. Yep, absolutely. So I mean, our goal today really was to try to... You know, we've all seen the 10-Ks, we've all seen the 10-Qs, we've all seen the files. We can regurgitate all the nu- we all know the performance from last year and from Q1, so we wanted to spare kind of the, just the, the kind of the repetitive stuff. You know, these are the things that we hear. These are the things that people are asking, and of course, we'll have Q&A to ask more, but that was really our goal today, was try to break out of just the old graphs that we've already all read and interject some new material. And so now we're gonna transition to have Parham take us through our real estate and our growth opportunities. Thank you, sir. Thank you, guys, so much. Good morning. My experience is that this is what everyone actually came here to listen to, is the property development side. Very happy to be here. My name is Parham Javaheri. Most people call me PJ because they can't pronounce my name, so you're welcome to, to go by PJ. I've been here a little bit over 19 years. I started right after we had gone public the first time as a development manager and a civil engineer. Just been an amazing run. Today, I have the privilege of overseeing the property development group as well as club operations, but here to talk specifically about our property development group. You've heard a lot about the desirability that we're focusing on as a company. Everything we do is a focus on desirability. That's the number one thing we're driving. Everything you hear is in our efforts to be the most desirable product out there. That's true in our club operations, that's true in our property development, that's true in our design, that's true in everything that we do. We'll talk about the growth opportunities, but I wanna first start by showing you guys a short video about our unique and unfair advantage in our property development in being this totally embedded, full service, real estate solution company within the four walls of Life Time, and show you a little bit about what we've accomplished and how we've gone from this group that was calling people, all outbound calls, trying to get developers interested, to a position now where most of our calls are inbound. People know who we are. We have that desirability in our product, and we're getting the calls now, which is pretty exciting. But I'll let you guys go through this video of some of our accomplishments. So everything you saw there was designed, from concept, design, permit, construction, operation was done in-house, down to the pillows and the cushions in those apartments, that we designed here. So pretty spectacular group of folks. Very proud to have them here, but really what it does is it allows us to be this extremely nimble development partner for the folks that we're working with. We don't have to... We can control costs. In 2008, you heard Bahram talk about us stopping construction on a dime. We had to do the same thing in 2020, and then we could restart the way we saw was most prudent because we are all in-house. If we meet someone that we're super interested in their site, I don't need to call my architect, book a time for them to get... We can be there tomorrow in their office and sort things out. But most importantly, real estate has historically been known as a win-lose business. If I win in my deal, you lose as a developer. Our ability to design with our member in mind means we're designing with our landlord in mind. So we're designing for them to come and enjoy our experience, but if we're in residential or malls, we're designing with that landlord in mind as well. So it's a win for the member, it's a win for Life Time, and it's a win for the developer. So we're really focusing on a win-win-win mentality here. There are five major avenues for us to grow our physical footprint, for us to harvest this desirability in this kind of golden era of real estate that we're in. The last two are what you saw in those early phases. The first three that I'll talk about are really new inventions and new opportunities that we've seen and capitalized on, and we'll go through each one of those, walk through how they work for us, how they work for the developer, and how we're able to maintain a constant ROIC across all these different avenues of growth. First one is retail. This was a pre-COVID issue. Malls, malls, whether it was the large malls or whether it was, you know, small, strip-anchored, retail centers, were really undergoing issues. But focusing mainly on the malls, they were losing their anchors, their historical anchors. Most malls have four on, you know, kind of bookending all and all sides of them. They had lost their luster, they had lost their excitement, they had lost their traffic, and the malls were losing them as space. So they have two major problems: no foot traffic, and as they lose these big anchor spaces, they have co-tenancy issues, where if they fall out of co-tenancy, it ruins everything. They can lose all their tenants. But meanwhile, those small tenants are suffering because there's no traffic to the malls. That's where Life Time comes in. You heard about our impressions, you heard about our traffic, you heard about our members. So when you think about our member being 1.5x, 1.6x more affluent than any trade area we're ever in, and that member is coming 12-13 times a month, that's pure gold to anyone. It doesn't matter what kind of developer, office, retail, that's, that's just pure gold. But we designed it again in a way that lifts everyone. So some of you went to Edina. I'll use that as a quick example. JCPenney was exiting the, exiting the mall. Our final day of due diligence on this one was December 23rd, 2 days before Christmas, when shopping is normally it's just a bonanza. There were 13 cars in the park in a 600-car parking lot outside of JCPenney. We took that down. We understood the needs of the mall. We took it down. We built our club on one side. We built a sport and a work facility on the other, and left a really beautiful entrance to the mall between our two locations, where we're driving all these folks. Since then, Southdale, where our club is, is the oldest enclosed mall in the country. It was dying on the vine. Today, they're adding a complete luxury wing. They have taken back all the luxury tenants that they lost over the years. They're coming back. Some luxury tenants that are new to Minnesota for the first time ever. Lululemon announced that it's relocating to the mall from across the street, actually, right inside those doors that we created. They had always wanted a grocery tenant there. We have one of the best local grocer tenants just opening, actually, today is their grand opening in this mall. We have turned this mall around. Other malls that we're in are seeing, not again, not our reporting, 12%-13% more traffic only months after we've opened. What do we get out of it? We get to markets like Edina, where land is $4 million-$6 million an acre, if you can find it. That's contributed to us. We get tenant improvement checks, and we get favorable economics. What do our members get? Edina is one of our big busiest clubs. What does the mall owner get? Well, we just described that for you. So pretty exciting times for us. We've done 20+ of these deals with 5-6 different mall groups, and we have more in the works. The next one is multifamily. So brief background on what any multifamily developer cares about in terms of their economics. They look at rent per square foot, they look at how fast this location will ramp up, and then they look at that retention. Retention is typically in the mid-50s, 50%-55% in any multifamily group. So you have that constant churn, that constant cost. What happened toward 2017- 2020 was this massive race toward just amenitizing these spaces. The little hotel-sized gym was no longer enough, even though no one used it, and they were building tens to hundreds of thousands of square feet of amenity space. Amenity space they had to design, they had to build, they had to operate, they had to maintain. Huge cost to their overall P&L. But what they really wanted post-COVID is a differentiator. Construction costs have gone up, and interest rates are damn near back-breaking to them. A lot of projects pulled off the shelf, right? Put, put on the shelf. We should have pushed off. So what does Life Time then provide is that differentiator. We are the community. We are the space that these residents actually use. So I'll give you an example there as well. One Chicago. So this is the River North neighborhood of downtown Chicago. Local developer, Jim Letchinger, JDL, has built four or five towers. This was his first super tall, 900 residential units he was building. He had a Whole Foods at the base, and he had 40,000 sq ft of retail planned on floor 8, and floor 9 was gonna be his 65,000 sq ft amenity. You name the type of things he was gonna put there. He wanted us at least 40,000 sq ft. We wanted to bring the full experience. He was able to go to 5, 6, 7 different Life Time and witness the community, not the space, as beautiful as they are, the community inside our clubs, and he took the leap of faith. We paid him really rent for the 40,000 sq ft. He gave us the rent, the rest for free. Again, he's now not maintaining it; he's not operating it. That building today is open and operational in a downtown market, where in the immediate vicinity, there's about 5,000-6,000 other multifamily units. He's getting 12%+ in rent premium. His retention is at about 75%, and Chicago is sitting at 50%. That one metric alone, without the rent premium, has completely turned his economics around. He's paid off all the loans, him and his partner own that building now. He's working on 2 or 3 others with us. Any project he looks at with residential, he wants Life Time in there. The solution we've come in addition to that, right? That's just a building where he pays for all our, his residents to be members. The solution we've come up with, in addition to that, is being able to offer you this holistic, Life Time Living approach to it. What is that? It's really just this connected living, where it's really this seamless connection between where you live and the Life Time community. We built a proof of concept in Las Vegas, outside one of our clubs in Green Valley Ranch, 150 units. Launched it about 14, 15 months ago. That, the Las Vegas Valley rental market is about $2.20 a sq ft. We're getting about $3.60 a sq ft. We just renewed all our leases, just passed the 1-year mark, and we are 90%+ in retention after we took rent up 5%. Those type of numbers are... They're just, they're crazy for a residential developer. We just announced a deal we're doing in Raleigh, where that developer is, it's in a really dense part of the uptown part of Raleigh. We're gonna do a Life Time Living building. They're giving us an 80,000-sq-ft club, turnkey. Mint on the pillow. We just bring our treadmills, and we're good to go. There are many more of those in the works. The ocean of opportunity here is in the hundreds. Over time, these take a long time. We've announced that one. We're breaking ground in Paradise Valley. Breaking ground or just broke ground. That's another 350 units. Koch is the equity partner there. We have four or five in heavy negotiation, MOU signed. These will continue to roll out, and again, it's a huge win for us. It's a huge win for the multifamily group and it's certainly a huge win for, for those residents. Did I just time out a slide for the first time? All right. Third, third of the five, office space. So with our obviously post-COVID office crisis, people still do go to the office, but fewer people go to the office. Landlords of office tenants are all clamoring for this, for the few people that are signing new leases. Folks that are under new leases are exiting their leases to go to new places, and, and landlords are clamoring again for that amenity. If I want you to come back to work, you need the amenities. We have historically done a lot in suburban office parks. People will give us, knock down the building, let us build a club. It's been very fruitful for us. What this is doing is giving us the opportunity to go into more urban locations. We mentioned PENN 1. At 54,000 sq ft at the ground floor of Thirty-Third Avenue facing Madison Square Garden, this deal we did with the office side of Vornado. They needed something to anchor their 2+ million sq ft of existing office and the office that's coming. They the office group wanted this. We just announced the deal at Prudential Center. Same thing, Boston Properties, 3.5 million sq ft of office in the, in... You know, Prudential Center is the place to be. We have 60,000 sq ft coming, and it was done with the office group of Boston Properties. So really exciting opportunities there. But we've layered on our ability to give them Life Time Work as well. So we have 15 Life Time Work locations connected in some form to one of our clubs. These were done also as a proof of concept with traditional lease structure. But by doing this, we can tell the folks at Vornado, we can tell the folks at Boston Properties, "When your office space becomes available on a management basis, we can do this Life Time Work concept." They're 25,000 sq ft-40,000 sq ft. They're designed to look and feel like a Life Time, but they're for our member. They're what our member expects, and we can show them now the P&L that says, "I'll give you a return on your investment you put to transform your space to a Life Time Work. We can, from operations, pay you rent, and you'll have this additional, you'll have this additional feature to your office development." So pretty exciting additional opportunity when we go into these office parks. Industry opportunities, again, I think a lot of you have heard about the consolidation in the market, a lot of square footage coming out of the industry. We've looked at thousands of these opportunities. We only take the ones that make sense for us demographically, psychographically. They are phenomenal opportunities, and they come in two forms. There are landlords who, particularly during COVID, got the rights to terminate and remove a tenant. Those landlords want Life Time. They want our cachet, they want our impressions, they want our desirability, they want our programs, they want our members, and they work with us to try and locate in their new facilities. There are also individual owners who don't have our people, don't have our programs, don't have this machine that you see here, and they can't stay in the industry. They want a way out. A lot of those folks want Life Time to be the name that goes up after them from a legacy standpoint. We announced the purchase of Arden Hills, 40-year operator. All he wanted was Life Time. He had higher offers from multifamily folks, from residential folks. What he wanted for the community he has built is Life Time to go up on that door. And the point I'd like to... You know, that final bullet point, 20% of our current portfolio are these type of acquisitions, of big, luxurious Life Times. We, we all had dinner in one of them last night. Very, very profitable location, has been for decades. This is one of those types of industry consolidations. We just opened in Irvine, California, location we've always wanted to be in. Again, another office park, though, and another industry consolidation opportunity. So really are able to grow our portfolio in a meaningful way through this, through this opportunity. And then ground-up developments, our favorites, tried, tested, and true. We're very nimble in the footprints based on the market we're in, based on the size that's needed, based on the opportunity that's available. These will continue being opportunities for us. We have probably the most robust pipeline of dirt deals in the company's history on our pipeline. Some of them purchased, ready to go, permit-ready, some of them in entitlements, but a really big, a big pipeline of these types of deals available to us. We do them sometimes in malls. We do them sometimes with in-office developments, sometimes in housing, in single-family housing developments, and sometimes we purchase the land and develop them ourselves. 66 sale-leasebacks in our history, resulting in 75%+ of that capital that we expend coming back to us. So, an interesting opportunity, one that we are focused on. With our cash flow conservancy that we went through, obviously, we can't start every opportunity that we, that we have in front of us, and we're metering those out to really spread out both the cash flow and open enough of these every year. I'll go through a video which has some of our upcoming deals in different formats and tell you a little bit about how those deals happened, and, and, and a little bit about where they are.... So these are some of the coming soon this year and next year. We have 80-100 deals in our pipeline at any given time, in all markets where the opportunity is. This is a club we announced in the Atlanta market. It was the old Concourse Club. Beautiful facility, indoor and outdoor pickleball, pools, great club, great location. This opens in a couple of months in Tampa Bay and Harbour Island. This landlord had kicked that tenant out, excited to open that. This is a deal that's about to break ground this year in Brea Mall with Simon Property Group. Really exciting project, it's been 4 years in the works. Talked about this a little bit. This is in Paradise Valley, in Neva- in Arizona. 330 residential units, 80,000 sq ft club with a rooftop pool. This is in Raleigh, turnkey delivery of our space from a multifamily group. In Parsippany, New Jersey, someone's knocking down an office building for us, giving us a large TI check, and we're able to build one of our clubs. Prudential Center, we talked about it a little bit, and then some of our ground-up opportunities. Chula Vista in California will open next year, South Gilbert in Arizona, Winter Park in Florida. You see some of these... For those of you that know some of these markets, these are iconic markets, and we're able to grab the land through different means to capitalize on them. Which leads to the final topic that's, I think, very frequently asked, is what is the white space out there? A very simple answer is it's infinite. Why would I say it's infinite? We go back to 2015 when we were going private, the same question was answered. You could say, we would say, "Hey, maybe 500-600 locations," when you look demographically and psychographically. But we didn't have all the vehicles to get there. I can tell you, well, I can build 20 clubs in New York City. Well, how do you get there? We've, we've created the vehicles by everything we just showed you. Now we can go to those markets. As, as the population, demographically and psychographically sits from today to the next four years, I can easily say you can build 600-700 total clubs, but that's assuming there's no growth. America is growing. It's aging, but it's growing, and so opportunities will continue to come, continue to arise. And the truth is, again, based on our commitment to being cash flow positive, based on our metering our growth, we can't possibly grow as fast as the white space is growing. Those opportunities will remain endless. I'm very excited about it, have the team to execute it, and obviously, the club's never been stronger, the desirability has never been higher, so it really does feel like the golden era of real estate for Life Time. We're excited about it. Thank you guys all for your time. All right. One thing I wanna add to the real estate is that I know you guys are gonna ask, "Why don't you do more of these, or why don't you do more of that?" As amazing the opportunities are, our particular product, it's sort of gonna define itself. You really have so many different types of opportunities. They are big projects. It's not like building Sweetgreen, so you could decide to do 100 of those, you know, 2,500 sq ft or 3,000 sq ft, 4,000 sq ft boxes in a certain number of time. They will take their own course. You have to be adaptable. You have to be able to move with the opportunities. Sometimes the opportunity comes in some club takeovers. You got to take those. Either they're there right now, otherwise, they go away. So if you take those, maybe you have to ice some of the other projects. This is something that we have been working and managing for over 30 years, and you just need to have that trust in this management company that it can make the right decision at the right time. I go back to the vision. Our vision has always been to bring health- Just stay. Happy and healthy to as many people, as many millions of people as you could possibly reach. Can you get out there? Our vision has been to build a brand that will transcend. When I look at companies that I admire, companies like Disney, you know, they may have ups and downs in their stock performance or something, but they have been here for a long time, and they continue to deliver to the consumer, and they continue to deliver the magic, they continue to deliver the numbers to the investors. Those types of companies has been what Life Time has been paying attention to and wanting to replicate. We've been wanting to build a brand. Well, I am proud of my team because they have done exactly that. They have demonstrated more than three decades of tenacity to adapt and change, and stay focused on building a brand that is coveted with hundreds of billions of dollars of billions of impressions, customer that is passionate. When you hear about people moving, they go, they decide to buy a house near a Life Time. They want to find a location that they can be near one. This is they put their lifestyle. So we're thrilled to have accomplished that, but what's in the future for Life Time? The future is to reach more people, more easily, continue to bring health and happiness to more people. So as we thought about this brand expansion. We basically have been working on Life Time Digital for multiple years quietly, and been excited to the right moment in time to basically get that launched. So what Life Time Digital is, is an opportunity born inside of three very important pillars, that you would have to spend $hundreds of millions from scratch to create this baby. But for Life Time, we don't have to spend a single dollar. All of it is simply the by-product of what we have been doing for the last 30 years. So what do you need to deliver an amazing, healthy way of life digital company? Like some of the other people you guys have maybe been watching lose a lot of money over the last 4, 5, 6, 7 years, you have to have an enormous amount of amazing content. With more than 10,000 classes taught a week, with tens of thousands of amazing performers and trainers, Experience Life, which has been award-winning, and Jamie will come up to talk about that, for last 20 years, we have amazing content. We also have a technology business with our team that basically has to support all of these locations, and tens of thousands of members and millions of members, the team members and members, all of those. So basically, all the major pillars that would cost money to build an infrastructure to deliver healthy way of life digital company to people, is all here. So we decided to launch LT Digital virtually 3 years-4 years ago, and we worked and worked and worked quietly, and I'm so happy that we are there now. Just like our clubs bring in all aspects of health and wellness, nutrition and exercise, social, et cetera, sports, all under one roof, LT Digital is that same idea in a digital form that can bring all aspects of meditation and exercise, nutrition, information that you would need, tracking all of it in one place in LT Digital. So with that, I'm gonna invite our team to come up. RJ, take over, but move a little faster. I want you to take three of the fullest, deepest breaths you've taken so far. Well, health advocacy is how we take best care of ourselves if something is off. 4, 3, 2. All right, now we're gonna add a squat to this, so 1 sweep. As a groundstroke, you want top spin on this, so therefore, we're gonna need a slightly closed paddle face. Thank you, Bahram. PJ, PJ, where's PJ? PJ, I might be just a little biased, but I think folks came here to hear about LT Digital. My colleagues, the Life Time Digital team and I, are extremely, extremely excited and proud of LT Digital. With a mission to expand and extend our brand well beyond the physical geographies we serve, to bring this incredible digital content to all, and explore new revenue opportunities beyond clubs. By way of introduction, I'm RJ Singh. I've been with the company for about seven years, and I'm extremely honored and proud to serve our consumers in new and innovative ways. So folks, all the features and functions that you saw on that video are available to you right now as we speak. If you have not already done so, Brett, I don't know if you had a chance since last time our conversation, if you downloaded the app. If not, please do it, explore, and provide us feedback. We're always looking for feedback. We created LT Digital with a very simple and clear vision: empower more people, anytime, anywhere, to live healthier, happier lives, and to leverage the power of this brand. We heard all about it today. This brand, 30 years of experience, expertise, and 30 years of proven success, and help propel Life Time to a whole new level. You see, folks, with LT Digital, we have a unique opportunity that we can exploit, and all the content that my colleagues will be talking about. To talk more about this opportunity and our competitive advantage, please welcome Fartash and Jamie. Thanks. Thanks, Fartash. Thank you, RJ. Good morning, everyone. My name is Fartash Akradi. I'm Senior Vice President of Technology, and proud to say that I'm going into my 28th year at Life Time. Now, I've practically grown up with this company. I remember starting at the age of 15 on the cleaning crew of our Eagan location, our very first club, and over the course of four years of high school, holding various different positions and jobs in that location. This did two really important things for me: first, it helped me gain an understanding of the very unique business and operating model that is Life Time. Second, it helped me develop a true appreciation for the day-to-day expectations and needs of our customers. Now, 24 years later, looking back, as I decided to pursue computer science in college, I couldn't be more excited. Now, as long as I can remember, it has always been the vision of Life Time to impact millions of lives on a healthier and happier journey, transcending the boundaries of our physical brick-and-mortar locations. And now, more than ever, we're in the best position to make this a reality, and the reason for that is simple. As Bahram alluded to, to play and win in this space, you need three core things: you need content, you need subscriptions, and you need technology, none of which comes cheap. With Life Time Digital, we get this naturally as a by-product of our core business. So let's get into that. As they say, content is king. At Life Time, for over thirty years, we've been in the business of developing the best health and wellness content, from our classes, yoga, strength, and cardio, that are delivered by the most amazing performers in the country, to our multiple award-winning magazine, Experience Life, and so much more. All of this can be digitized under one experience, LT Digital, and connect the dots for our consumers in ways that nobody else really can. Now, when it comes to subscriptions, LT Digital is very uniquely positioned, in that we have access to a never-ending pipeline of new subscriptions every single month, and the reason for that, again, is our core club business. Our clubs generate a wealth of possibilities for new subscribers every single day, from the guests and visitors that come to our clubs every single day, to members that are traveling, to the thousands of spectators and athletes that experience our athletic events or our pro pickleball tournaments. This, in combination with the billions of impressions that the Life Time brand generates, puts LT Digital on a path to 100,000 new subscribers a month, if not more. And frankly, we've already witnessed firsthand the power of this subscription engine. In the very short amount of time since launching LT Digital, we've already surpassed over 500,000 digital subscribers, and the beauty about this is that we've only just begun. Now, in order to support our core club business, our 1.5 million adult members, our 40,000+ team members, Life Time already invests over $60 million a year in technology and digital experiences that one would expect from a luxury brand. With very little incremental investment in money and energy, these experiences and capabilities can be easily scaled to a digital audience. If I may, let me leave you with a thought. Any player in the digital space would have to spend an insane amount of money and time building content, acquiring subscribers, and developing technology. With LT Digital, this happens naturally. This happens organically, simply as a by-product of serving our core business. With that, if I may, I'd love to introduce to you my colleague, Jamie Martin. Thanks, Fartash. As Fartash said, I'm Jamie Martin. I am the Vice President of Content Strategy here at Life Time. I'm also the Editor-in-Chief of Experience Life magazine. Next week will mark 19 years since I joined the company, and that was as an editorial intern. I have spent my entire career here at Life Time, and that is really because I connect so deeply with the vision of what we're doing, of helping people live healthier, happier lives, and I get to do that through content. I get to do storytelling, and videos, and all of these pieces that really come together, and I'm so excited to show you, you know, what we've created over the last 30 years, and how it's coming to life in the Life Time app. So just as our clubs have created this unreplicable suite of health and wellness offerings, we are doing the same thing in our digital app. We are bringing together that 30+ years of content, and experience, and expertise with the award-winning editorial content from Experience Life, to create this really one-of-a-kind wellness tool in the marketplace. It's not just about workouts. It's not just about nutrition and weight loss. It's not just about mindfulness. We are connecting the dots between all of those, because we know it's not just one factor that matters with healthy change, it's all of them connected. So I'm gonna dive a little bit into the different content that you'll see in the app and how it's coming together, starting with Experience Life. Back in 2001, Life Time was on the forefront of content strategy when it invested and began publishing Experience Life as a standalone health and wellness magazine. It was about being a thought leader in the space, and it wasn't just for members, it was for anybody who was health-motivated. So now we have over 8,700 pieces of unique content existing already and more to come. This all exists in the Life Time app. It's accessible right now, and it complements and validates the rest of our offerings, including things like live stream. We live stream hundreds of classes from our clubs every single week. These are taught by some of the top fitness professionals in the industry, and they're in our branded class collections format for cardio, strength, yoga, and cycle. We also have more than 150 on-demand workout videos that are accessible right now, with a lot more to come. These are really for anybody, anywhere, making it really convenient no matter what their goals are, to move their bodies every single day in some way, shape, or form. We have a growing library of fitness and coaching programs that has been created by our own Life Time experts, and as I mentioned, with all that, those years of archives of content that we have, we have so much opportunity to pull and create more and meet people wherever they are. We also will be enhancing this area in the future with Lora, our AI health companion, that will be able to customize and deliver workouts and programs based on your unique data and other interests and inputs that you share with it. We have Life Time Talks, the healthy living podcast that's aimed at helping listeners achieve their health, fitness, and life goals. You can kind of think of this as the TED Talks of health and wellness. I am the co-host. We are currently in our season 8 right now with more than 130 episodes, and season 9 will be recorded this summer. Then there's meditations. Meditations is really important because we know right now people are stressed out, they're busy, a lot of people are burnt out, and this is our opportunity to help meet people where they are, to help them find a little bit more peace, calm, and presence in their lives. With meditations in areas like stress relief, better sleep, mindful movement, there's something for whatever you're dealing with. The last thing I'll cover from a content perspective is some of the exclusive partnerships that we have. In this case, it's with Pickleball 360. We've partnered with Ben and Colin Johns, who are both top-rated pickleball pro ball professionals, and they have shared with us dozens of video tutorials. So if you're interested in improving your pickleball game, that's there for you as well. All of this comes together at your fingertips in the Life Time app, and we have enhanced personalization on the roadmap, so that down the road, what's in front of you on that screen will be determined and delivered based on your unique interactions, activities, and interests in the Life Time space. Our goal really, with all of this, is to educate, entertain, and empower people no matter where they are geographically, and probably more importantly, no matter where they are on their unique health and wellness journey. With that, back to you, RJ. Thank you, Jamie. Folks, all this work, all this excitement, begs one question: What does this all mean to you, the investor? Peel that onion, please welcome Brandon and Annika. As soon as we can get a mic on Brandon. Thanks, RJ. Well, thank you, guys. We are the nutrition team, and I know everyone's getting hungry, so we'll make this quick. My name is Brandon Dyksterhouse, and I recently joined Life Time as the VP of Nutrition. Let me get to the right slide here, and let me be the first to tell you, I am ecstatic to be here. I love this company. I've only been here six months, but it's been a dream ride so far. Previously, I was the CEO of the largest marketplace selling sports nutrition to endurance athletes. When I joined that team in 2016, we did just under $1 million in revenue. When I left last October, we were on pace to break $50 million. It was awesome. Even better than that, on September 14, out of the blue, I got a call from Life Time CEO, Bahram Akradi. He politely introduced himself, he shared his vision, and told me about the emerging opportunity with LT Digital. I was so intrigued by this opportunity that I literally jumped a flight the following day, met the team in Minnesota, and the rest is history. Call it serendipitous, but the one thing I really struggled with in my past career was really scaling and reaching people in a meaningful way. So Life Time is a business that has all the pillars. You guys have seen this today. The pillars to bring great products to people with ease, while building a multimillion-dollar digital sales business, without adding any additional infrastructure. So what does this all mean to you? I proudly present to you LT Shop. LT Shop is literally quantifiably forward in the way we do business digitally, offering products and services anywhere, anytime around the world, to the people that desire them the most. This is an amazing opportunity to build a big business with a built-in competitive advantage. We have built-in customers to the tune of, well, obviously, millions and growing organically every single day. We have this incredible built-in sales force, 11,000+ team members that are made up of fit pros, so obviously expert, educated, knowledgeable in the space, and we have built-in technology. We basically have all the customers, all the technology, everything you could possibly want, and we're not paying anything additional to make this happen. So let's dig into the opportunity with LT Shop. LT Shop, our team is going to focus on three categories to start with. The first is Life Time Health which is our very own zero compromise nutrition solutions. The second is co-branded products, and the third is partnerships. To tell you a little more about Life Time Health is Coach Annika. Hi, you can call me Annika. If you're a member, you might know Coach Annika. The app that Jamie was talking about, I own a few different programs in there. But I started at Life Time during the Great Recession of 2008. So I always chuckle when I hear about it, 'cause I forget, that's exactly when I started in our Arizona market, and I just left a medical internship to be a medical or a registered dietitian. So my bosses were doctors, dietitians, nurses, and I told them I was gonna take this opportunity at a health club, and they thought I was crazy. "You're gonna go work 100% commission? Like, you belong in a hospital, helping people that are sick, getting them on nutrition strategies because of their illnesses and their medications." But I knew after walking into that first club in Palm Valley, Arizona, that I was gonna be hooked, because what I realized as a person in this industry of wellness, is Life Time has strategically made an environment where you can't make an unhealthy choice. We talk about this, I talked about this last night with a few of you, where you're like: People must spend hours here, and that is exactly what Bahram's created, and I knew I wanted to be a part of that because I know how hard it is to be healthy. Our America alone has made it so easy, so I loved and fell in love with Life Time, and I've stayed for 15 years because I've fallen in love with the members. A few of you are members I met last night, and I will continue to make strategies for them. So I'm gonna talk about Life Time Health, which is our Life Time branded nutritional products. And what's really hard for dietitians is two things. We know that there's a need for it. Our diets suck, especially in America. We're on medications that deplete certain nutrients. We exercise, we're stressed, there's all sorts of needs for it. But on the other hand, the industry is really tough. There's 100,000 different supplement companies. There's very little regulations when it comes to what's in there, especially, it's laced with all sorts of artificial ingredients, things that are unnecessary. So it's really hard to come in at that point of view to actually help customers. But when I started at Life Time, I was told this really legendary story that has to do with this guy, and it was over 25 years ago. He took what supplements he was taking and sent it to an independent lab to get tested. Most of us, we can't afford that. Most consumers cannot do that. We have to trust the marketing, and that's kind of what Brandon was talking about. There's all this marketing out there, so we kind of just fall for it. But people would bring in their supplements to me, and I'd throw them away. But when he got his results back, they were abysmal, and so from that day forward, he said, "That's it I'm gonna make a trustworthy, highly transparent brand that's on the shelf for those Life Time customers, so our members can have great nutrition solutions." But he would also take them, as well as us and our family members, and we are so proud of it. So let's talk about what we've built. Oops, sorry. We've built the best. So my goal for every customer I talk to, every member, you guys in the room, is to know what's going on in the industry. So the reality with us is we have these tight manufacturing partners that we visit multiple times a year. It all starts with the raw ingredients, so you need to use stuff that's actually efficacious in research, and a lot of the industry doesn't do that. They'll say there's unique ingredients in there, but the amount is so little and not really what's been shown to do research. So we make sure what's in there is what's in there. So our manufacturers actually test the raw ingredients, which, you might be surprised, you don't have to. You can get soy, pea from China, and it could be something else, but you'd use it in your recipe. We also take it so that it's all tested on the outside of the manufacturer, so that's called third-party testing. We decided to use NSF for that. But the idea is that it's traceable ingredients, it's raw, high-quality ingredients. We trust our manufacturers, and then we store it and transport it ourselves. What I love to tell my customers is you shouldn't be buying supplements from a warehouse where your favorite influencer is also selling a shirt, right? That's kind of what the space has become. It's actually insane that we do that. We want it to be in somewhere where it's temperature controlled. We're talking nutritionals, right? It's important. Just like medications, you need to be thinking about what you're buying at the store and what you're bringing home. So for us, we've built the best, we're gonna keep it the best, and that's kind of what we're excited about. One other thing I'll add is we have 65 unique Life Time formularies, so 65 LTH branded products. We've built for our members, so we've got a slew of different things, a lot of protein powder, 'cause I educate a lot of trainers, and they love their protein powder. So we got a protein powder spot for every single dietary restriction. We have wellness nutrition kits, we have wellness pills in the form of fish oil, and really, the idea is we're still just listening to our members. I get all my ideas from the locker room at Chanhassen, honestly, and that's what's best about our customers. You keep hearing about it today. They literally will just tell you what they need, and they expect the best and trust the best, and our money goes all into the actual cost of the product, okay? I'll get back to that in a second. So I want you to look at this is where we're going. The packaging on the shelf is eventually gonna look like this starting this summer. So one thing we've heard from our customer is, especially because of the marketing confusion in the industry, is it's hard to know what things are for and what to do. So we're launching the LTH branded supplements, but you'll see little unique adjectives that outline the key benefits. So fish oil is glow. We're also looking into more sustainable packaging solutions because it's a lot of plastic, and a lot of times we have to not only go after the customer desires, 'cause maybe they're not willing to give up some of the things that might be more sustainable to the environment. But for us, if we take those plastic containers and make them refillable, we can create solutions where our customer that becomes on subscription, can be delivered online through our packaging resources and make a big win for us, for the planet. So less plastic, better for us, better health for everybody. And so I'll leave you with, there's obviously a tremendous opportunity in that same industry. Like I said before, a lot of the money goes into the marketing and the tech and getting people to want to buy. We see a lot of nutrition companies fail because they spend so much on that, but the profit's not there. We've built a pretty profitable business. Not only we're A- Z, there's no middleman. I'm not paying anybody else. We have a dietitian here, team at corporate, that creates the formulas, uses research, and works directly with our manufacturers... but like Brandon was saying, that sales force, they're fitness professionals. They never feel like they're selling, they're educating. If you've ever met a personal trainer, they're infamously not very good at sales. They're doing it because of their hearts, and they know that people need it, and we use them for all of our insights and data as well, and really, it's just a tremendous opportunity. It's where we're going with the digital app. We've spent the last 25 years using the trainers and their customers and clients to grow this business. Super profitable, we're really proud of it, but we're more excited to get on the digital side because we're digitizing those performers as well to serve up this LTH line to all those new eyeballs. Thanks, Annika. As you can probably tell, we are incredibly excited about Life Time Health. But I just want to assure you, LT Shop, LT Digital is more than just nutritional products and services. We're partnering with the best brands in the industry. Better yet, we're offering co-branded and exclusives that are only available on the LT Shop. Think of this as the who's who of the health and wellness industry. We couldn't be more excited to connect the dots, being able to bring Life Time Health to all of our subscribers, working with incredible brands like Lululemon, HOKA, Garmin, and more, and believe me, there's tens, if not hundreds, knocking at our door to be a part of this opportunity. It's similar to the real estate pipeline. We're feeling the same effects with LT Digital, and it's just a really exciting time to be a part of it. Lastly, we couldn't be more excited to bring all these opportunities to anyone, anywhere around the world and make this successful any time of day. So part of gift is... Look, there are a ton of companies out there that have amazing ideas, but what I wanna leave you with today is, most of these companies break their backs trying to build this incredible infrastructure that you've heard about all day long. We're fortunate to have this already built for us and be able to capitalize on that. Now, I don't know if this is gonna be a $100 million opportunity, $200 million opportunity, or even $500 million opportunity, but what I do know that 2024 is the start of something incredible at Life Time. All right. Thank you so much. All right. We're gonna go to the Q&A, but before we get there, I wanna take one minute and most sincerely thank all members of Life Time team, all the team members. Many of the executives are here. They work passionately and relentlessly. One thing is different about this company is that the corporate office is not the boss. The corporate office serves. We work, everybody here, we relentlessly work to serve our team in the field, to serve our members. The culture is amazing. The vision is always consistent. Whatever we do, we do it to be the best or we're not doing it at all. Our nutritional products, our athletic events, our Experience Life magazine, every single thing we endeavor, the vision is to be the best or not do it at all. It's not a slogan, it's not advertisement, it's truly how we're wired. It's how we work. So I'm proud of this team. I'm grateful to them. All these ideas, all this vision that comes to life, it comes to life with their passionate execution, so thanks to all of you. With that, I want the team to come up. We're gonna take questions from you guys, and look forward to see if we can shed some more light on any important questions you guys may have. Come on in, PJ, RJ, Dani, Eric. All right. We have a couple of folks here to bring microphones to you guys, so that when you have a question, you can state it loud and clear enough, so it can get through the webcast, and then I will kind of hand over those questions to different folks to answer. All right? Fire away. Do we have a...? Yeah, there we go. Thanks. Hi, Brian Nagel from Oppenheimer. First off, thanks, great presentation. Thank you. The question I have, I guess my first question, so we spent a lot of time yesterday in the clubs. I was at a dinner for several hours, working very well, and you talked here a lot about, you know, there's a lot of these initiatives and the evolution of the offering. So as you look in the maybe nearer term, as you think about, you know, how that in-center offering is evolving, what excites you most? I guess it's probably for you, Bahram, but what excites you most about the evolution, the connection with the consumer, and, you know, where we could see that. I don't know if it's an in-center spend would be the quantifiable measure. We've talked, but what excites you most about how that's evolving in the end and where your members are connecting more with the brand? Yeah. So look, one of the things that is most important is to just connect some of the things that team has alluded to, but I wanna elaborate on. So the health club industry, when I started, the businesses I started in 40-some years ago, it was all about non-use model, right? You basically focus on having the marketing, advertising, getting people in, getting them sold, and then, you know, basically, it's a cheap enough price, you don't use it, right? Then you basically, you know, you keep paying, and that's how the whole thing works. When you get past, 20 years ago, that was a 100-dollar mark. Today, call it $200 average at a price point. When you get to that number, you have a completely different business model. It's basically you need to focus on the use model. The more the customer uses the club, right, the more they're gonna be engaged. It's more recession-proof, because when COVID came, one of the things that immediately went through my head was, we have about 20% of our customers who are paying and they're not using. This is back then. Once everybody comes back, the 20% has no reason to come back. So we need to reshift our thinking. We focused significantly more... We basically are focused on every member is a user, and so everything is worked on desirability, right? And if we increase the desirability in every type of interest they have, they're interested in yoga, we wanna have the most desirable yoga. They're interested in Alpha, we try to deliver the most interesting, most desirable experience there. If they're interested in food, so we basically work strictly on desirability and make sure we're monitoring and watching that, and then adapting very, very quickly. So what I can tell you is that our business is, in many ways, much easier than packaged goods business, where you got to build a product, you got to have somebody come in, and then you have to get a focus group to, you know, to watch them, to see how they engage with your product. It's never the same. We get to watch the customer and hear them every single day, and if you're not lazy, that's it. If you're not lazy, you listen carefully, they are telling you what you should be doing the next 6 months and next 12 months. Then everything has always been thought through from day one, knowing that we have to adapt. You don't adapt, you're gonna die. Life Time has demonstrated adaptability, so we're constantly looking. Does that answer your question? It's very quick. Yeah. If I could just one more quick follow-up. Yeah. Quantifiable, I guess maybe for Eric. Well, yesterday you announced a sale-leaseback transaction. This is the first in a while. So maybe more details, because I don't think I saw any type of rate. So where was the rate on that, and does this signal then that the sale-leaseback market may... You may be reentering it, or is it this, is this the first of what may be a new trend in sale-leasebacks? Let me take that because I handle the sale-leasebacks- Okay ... with my team. Okay? So the sale leaseback market for us has been one that we know is always open. We have LOIs right now that we haven't yet responded to. It's a function of the interest rates and for the... And their average cost of capital. So that market today, the deals that get done is roughly on a the most important to us is that gap rent, okay? The gap rent over a 20-25 year initial term of the lease is right now, these deals just got done. The last couple that we just did is about 40 basis point more than we had done in the past several years. It's not a meaningful number. We are generating literally about 5% more EBITDA margin right now than we were doing in 2019. Having to pay 40 basis points more, it's not at all changes the economics. We are very, very well positioned to do sale-leasebacks, even if the rates never go down. The reason we're holding back, because we are pretty confident by end of this year, interest rates will be at the point where we can actually get back to those rates under, under that 7 cap rate, 6.7, 6.8, you know, and then eventually go to the low sixes. So it's just timing. We have full optionality. I'm just telling you again, we have the optionality of doing another $200 million of sale-leaseback in the next 90 days if we choose to, but we're gonna end up paying 50 basis points more than if we are 6 months more patient. We're taking them as we need them, or as we—these were very, very good partners, very good rates, so we took these, and there are discussions going on right now, okay, on other sale-leasebacks. Okay? Alex, give me that. I'll just hand it over. All right. Perfect. Great presentation as well. Alex Perry, Bank of America. So I just wanted to ask, so you laid out your four growth initiatives over the past, you know, three years, in terms of DPT, pickleball. What are you looking at next that's gonna drive the next leg of growth? You know, what is that fifth initiative? And then can you also, as part of that, talk about your sort of ability to repurpose the space? You own, you know, millions of square footage of space. Talk about, like, the CapEx requirements to eventually repurpose the space if you identify a new trend. Thanks. Yeah. The CapEx requirement, like they mentioned, is that roughly $10 per sq ft for last year's square foot. That's what you guys can model. 60% of that, $6 of it, is what we just got to spend. You know, we got rooftop units, asphalt, things that you just got to maintain to maintain that Class A status of Life Time. No club gets old. The other $4 is the modernization. It's basically taking... A new format of exercise comes in, and we have to readapt the floor plan a little bit to deliver that or a pickleball version. So that is how we break up our $10 a foot to $6 and $4, for basically just pure maintenance CapEx and then modernization.... There is significant amount of tailwinds left in the initiatives we have launched. Pickleball is nowhere near done, DPT is nowhere near done, ARORA is still growing. All of these programs are still got quite a bit of runway. At all times, we are working way ahead of time. We've been working on Miora, which Allie, our vice president there, you know, is leading with Dr. Jim LaValle, the chief science officer. We are working on initiatives which we don't need at all to produce any dollar of revenue or EBITDA this year or next year. We're doing those for two years, three years out the out front. What Life Time shops can provide in partnerships or retail sale or nutritional sales is the stuff we're working on right now for a couple of years ahead. Hopefully, some of those starts materializing in numbers. If they do it sooner, great. It's not part of our numbers that we are sharing with you about growth for 2024 or 2025. So there's always stuff in the pipeline. We're always thinking years ahead, but there's quite a bit of momentum left in the stuff that we have right now. Does that make sense? That, that makes a lot of sense. And then I guess just a quick follow-up: so you laid out 10%-12% revenue growth, 10%-12% Adjusted EBITDA growth, you know, margins within that threshold of 23.5%-24.5%. What would drive margins above that? Like, do you have levers that you can pull to, to eventually drive margins higher than that? Thanks. I'm gonna let you take this. I'm trying to avoid that answer, so. Yeah, I mean, again, to be clear, it's not something that we would certainly guide to. But, you know, there's other initiatives. You know, we talked a little bit about some of the legacy pricing opportunities. You know, the way that we've done it has been very successful, so you could potentially see some out of that. We're always looking for operational efficiency in our centers, and especially in our G&A. We don't expect that. Our G&A is not gonna scale at the same rate that our revenue. So we expect to continue to get scale in the business on the expense side, but we're just not at a point where we wanna guide to that. And so we know that there'll be something likely there. We're just, we wanna stay kind of in that 23.5-24.5. In other words, we don't wanna have you guys go change our numbers right now. Yeah. So we're just, we're just trying to make sure you don't get ahead of us. Thank you. Next? Okay. Go ahead. You, go ahead. It's- Yeah, John. All right. John Heinbockel, Guggenheim. So I got two related questions. Yeah. Right, so number one, right, so retention goes up, so members per club go up, in theory, engagement increases. So I think about you know, weekly swipes or monthly swipes. As that increases, how do you think about safeguarding the member experience? Yeah. Capacity, whether you can do something inside the club, or now do you rethink density, and we wanna self-cannibalize more clubs and bring the experience back down? We do all of that, so let's go through that. So we look at our club experience, and our clubs, as I mentioned to you last night, are about a third, a third, a third. Yeah. If you think about our clubs today, a third of the clubs are at the level of utilization right now, which we really don't want to increase the number of monthly swipes. The only opportunity within those clubs is to really work hard to bring people in via incredible performers and incredible ideas in off hours, to basically shift some of that traffic, if you wanna have extra traffic, into shoulder hours, right? Because the peak hours are pretty intensely being used, and so the clubs are on a pretty, pretty stiff wait list. Then there's a third of the clubs that they have still, they're moderately. If we, you know, we can, we can take another 10%, 15% swipes, and it wouldn't hinder the experience, and we have clubs where we have a little more opportunity. So we are working all of those systems. And then finally, you know, as the clubs get on wait list right now, our ability to adjust price dramatically increases, and our retention dramatically increases, which all of those gives us just more flexibility in monetizing that particular asset. So at this point, all trends are extremely positive, and we just can continue more opportunity to executing. I know we have clubs that aren't executing with the precision that we want, so the focus of the company is go to the areas that they're not you know, taking full advantage of the facility in their particular market, and so those are our lift opportunities in the company from execution. And then, secondly, right, when you think about the five real estate channels, right? And all the opportunity that exists, and eventually, right, when you're generating free cash flow, so the capital capabilities can go up, how do you think about the gating factor on growth? Yeah. Right, and can you, can you do more than... You say 8-12, you know, could you get up into the teens, or do you, do you, do you wanna self-impose, you know, sort of a ceiling to make sure that you execute? Yeah. So I'm gonna share this with PJ, why don't you get up and come close? We have more real estate opportunities right now than we have been allowing, we've been gaining it. Because we're committed to this cash flow neutrality that I liked your terms, "neutrality to positive." And the reason we don't wanna just say, "Oh, we can just," like Eric said, "bring in the cash and hoard it," is because we have so much growth opportunity, so that's within our capability. The one thing about the type of real estate I want him to expand on, is that it's not 100%. Some of it is in your control. Right now, he's got eight or 10 pieces of land he owns, right? That he can basically start construction at any given time. Those are in our control. Some of the other deals will just shift with the developer's capability, the other timing zone. So we need to be nimble to take advantage of those, but the commitment I and Eric are giving you guys is we're gonna manage very disciplined to the internally generated cash flow that we produce, and make sure our net investment, net investment, investment capital is just underneath that, and then everything else will support the growth. PJ? You asked the earlier question on if our wait list and our, I think, first of all, thank you for that question, because, yes, the busier our clubs are, the more they're on wait list, the more we can build. It expands that white space for us, where we can go closer to a club. But to Bahram's point, some of these clubs are, you know, we're working on a deal right now, hopefully announce it a few months in Texas, where the building's available, there's a vacancy, it's a brand-new building, they want Life Time there, and I gotta go now, right? We gotta go now, and it's gotta open next year. So our resources, our time, our money goes to that project. Maybe one of the prototypes slips out two, three months before we started, so we can manage that cash flow, not on an annual basis only, but on a quarterly basis. But as that cash flow, the Free Cash Flow expands, I think your question is: Can you do more? And I think the question, for us, the answer is yes, so long as we're staying true to our cash flow neutrality. So all these things, they really, they do help. Having these eight, nine, 10 prototype deals on a shelf, permit-ready, makes it, you know, if you have a bit of cash infusion, you can get something going immediately. You don't have to go out and seek some new deal. You have it, you know, permit-ready and shovel-ready. Okay, great. Yes, let me give the... Go ahead. Why don't you go ahead, and then we'll go to her? Hi, Megan Alexander from Morgan Stanley. So just wanted to dive in a little bit. You know, you talked about mature comps, mature centers comping 4%-5%, driven by dues, and then in-center spend and, you know, gaining that share of wallet. So maybe a two-part question: Is it, you know, 50/50 split between dues and pricing and in-center spend? And on the dues part of it, that would suggest 2%-3%, maybe in line with inflation. Is that kind of how we should think about, you know, how pricing looks like on a longer-term basis? And is that—when do you make the decision to, you know, take someone up from where they are to, you know, maybe not the rack rate, but raise the due for them? And then as far as the in-center spend goes, second part of the question, you know, how do you think about share of wallet? And is the embedded incremental opportunity you talked about today, is this, I don't wanna say one-time in nature, but you've done a lot with personal training and, you know, to really kind of revamp that in-center spend. And is that one-time, or are there incremental opportunities beyond 26 to continue to gain share of wallet of your members? Yeah. Oh, Dan, you wanna maybe take the pricing, or you want me to take the pricing? Yeah. Okay. You take the pricing, Dani. So pricing-wise, as it relates to legacy pricing, I believe you asked the question: How do we determine, right? So we actually have a pretty complex model that we're using. Approximately 77 different metrics that we have based on every single membership, right? How often you're coming to the club, how far away do you live? And we take a look, and see kinda where you rank, right? So we're looking at those more stickier members and making sure that we're not hitting maybe the ones that aren't coming as often. And making sure we're taking a really solid approach on where we're taking those increases. Yeah. You can't take anything more than once a year, and we're making sure that we're always maintaining at least a $10 difference between our rack rate and their current rate, so. Yeah, that gap that we have, we won't close that gap in from average dues to rack rate anytime soon. And as far as, like, the in-center business portion of it, that's not a one time, because if you look at the engagement, we've got all of our members are using a lot more frequently, and that is translating into in-center business, higher in-center business revenue per member across the board, particularly in DPT. So, they're coming more, and they're spending a larger share, and that's not one time. That's consistently. Yeah. I'm gonna elaborate on both of these. On price increase, as she mentioned, there is a very, very sophisticated AI model that we've been exercising for many, many years, right? And it's just refining and improving. So right now, this year, based on some modest modifications we made on who is getting what amount of price increase, we virtually are not seeing any incremental attrition coming from somebody getting a letter saying, "Hey, your prices are going up $10 or $15 or $10," whatever. So that's been really well executed. You're gonna see a same store come through the churn, as she mentioned, and some coming through this legacy price increasing on the due side. On the in-center side, what I can tell you clearly is we have significant opportunity on our execution in desirability. We have cafes in the exact same kind of club, like same demographic, same traffic, same member count, same dues. We have cafes that are doing $80,000 a month, and cafes that are doing $160,000 a month. That's on us. That's not the customer, that's not customer being worn out from recession or this or that, headwinds, it's on us. We are not executing as good as we can. So all of this goes back to our focus on going to where we need to go to improve the desirability for a customer, and there is plenty of opportunity. I think the 4%-5% that we are giving you in terms of the same store, is a function of the fact that we know we don't wanna take that $19 million. It would be a suicide, as we've told you. So we have the built-in opportunity for foreseeable future to see a nice same store as these memberships transition, and we put the legacy price increases in, and then on the other side, we're gonna continue to improve the array of offering to our customers and our execution. Okay? Two questions. Yep. Scott Scher, LMJ Capital. Two questions. First question: Do you do anything proactive for the customers that aren't using the club? So you have your users, you know who they are, you see their swipes, they buy a lot, that's great. You know they're gonna keep going, it's a lifestyle. But for the people you lose, the 10% or 15% per year, who you know aren't using the club- Yeah. Do you do anything, either digitally or ask the manager to meet them when they do swipe, because you know they're in the club? Yeah ... to go talk to them, to try and decrease the probability that they will leave? Yeah. We are doing exactly that. So, we are constantly communicating. Now, we don't prompt, we don't solicit, but there is, you know, emails coming out, providing great information. It's a very, very high-end execution. We do it every Sunday. You just basically shares with you the other different ways that people can get engaged. The member concierge team and the lead generals basically get the data. They can reach out to their members and invite them to different particular events that the most suit them, and we basically do all of that to make sure our engagement with the members are high level. We also see members who are basically, their patterns are changing. To give you sort of a clear indication of how detailed that is, and if you're using the club 2 days a week, and that's all you've been using the club for the last 4 years, there's almost no risk in, as long as you're still using 2, then there's no risk in you. But if he was using the club 5 days a week and has dropped down to 3, there's a risk with him, even though he's using the club 1 day a week more than you. So we actually study all that, and we take the proper actions for it. Great. Second question. Yeah. I believe your relationship with UnitedHealthcare via ARORA, I believe there's some discounting for ARORA members. Is that, is that true? Oh, yeah. It is. Basically, those arrangements are basically they're paying a fee for these people if they use the club just one time in a month. Mm. Those people are restricted to a certain hours, and then if they wanna have the full access to the club, they basically pay a signature upgrade that gets closer to our rack rate for what we're getting from them. So given that, and given that you know UnitedHealthcare well, right? The same state. Given that we know the benefits of working out, child obesity problem in this country, drug problem in this country, mental health problem in this country, why can't you work with UnitedHealthcare to broaden that beyond the ARORA to give discounts to the average American, to bring them into clubs? It would benefit everybody out there. Yeah. Telling a 70-year-old, "You're gonna live longer, you're gonna feel better," is great. Telling a 25-year-old and preventing them from having all the health issues that they're gonna develop saves UnitedHealthcare $3 million over the Life Time of that person and benefits all of society. Why can't you... Are you working on that? Is that a possibility? You're smiling. So can you talk a little bit about that? 'Cause it, I don't quite understand why we're focusing on that 70-year-old person and not as much as the 20- 70. Yeah. So let's go through that. It's a pretty intricate execution. We don't want the club to be all 10-year-olds; we don't want the club to be all 80-year-olds; we don't want the club to be all 26-year-olds. Life Time was designed to replicate a full community of 90 days old to 90 years old, right? And balancing that experience is super important. So we have built in incredible flexibilities on these agreements we have with UnitedHealthcare and others like them, in basic, how much of those customers we would allow in, in any particular club and when, and at what times. So basically, we can manage the total experience. At the end, we only have so much capacity, like John was saying, and you don't wanna have all that capacity be taken. If we wanted to take all ARORA customers, we could get the clubs filled up with all ARORA customers. We don't. So we're just basically completely managing the experience, so it is one that feels phenomenal to everybody. Like we, you know, if you look at the studies, the healthiest populations are where the young kids and the seniors are in the same village together. They're communicating, they're interacting, and we're working on developing that same feeling, as you can see in our clubs, and we're succeeding with it. We are creating a place where people want to be in. Does that make sense? Okay. She's had a question here. Thank you. Hi, Khadija [Haque] from RBC, and this may be more the first one. I have two questions. The first one may be geared more towards PJ. My first question is, on the 8-12 locations that you guys spoke to on a long-term algorithm, on average, how should we think about, the mix of formats? You listed the five formats. How should we think about, of the 8-10, what percentage is ground up, what percentage is malls, multi-residential, et cetera? You know, I wish I could give an exact answer on how that mix does turn out. Ideally, you'd say if I had 10, you'd do two of each, right? Just the way that real estate happens, that's not really feasible. We have to kinda go with what the real estate gives us or what the market gives us. You know, some of these residential projects, you might sign the deal today, and it might come online five, six years from now. We still have to work on that. Our prototypes are anywhere from 3 years-6 years in the making, depending on what market they're at, and then some of the opportunities that come our way, whether it's an acquisition or a takeover or an existing space, like a PENN 1, like they needed that right then and there for their opening day, and you have to rush to do that. What we're trying to focus on is make sure that all the projects that we do come in really at that rate, on an annualized basis, you get that amount of square footage, and it's a blended ROIC that's in line with our current returns. I can tell you that we're working on equal amounts of each one, but it just isn't this linear process. Like BA said, if we're building, you know, 100 Chipotles, I can just tell you, it's like clockwork. The space is there. We can get it in certain amounts of time. But what helps us get the best financing, the best deal structure, the best locations is flexibility. If a landlord says, "I need this, you need to be lockstep with me, and I need to open in 13 months," I can do that for you. We have a deal working in San Jose, for example, where we have a deal done. They can't get that landlord out until 2027, the existing tenant, until 2027. Every 3 months, they call that tenant and say: "Do you wanna get out? Do you wanna get out?" As soon as that person says, "I'm out," we'll be in 15 months later. It really is a lot more fluid than that in order to get the markets and the types of deals and those TI dollars as well. We do need to keep 80-100 deals in the pipeline, and we need to be able to shift the growth. So the way we're trying to help you guys, you know, sort of model, is think about 100,000 sq ft as a large format equivalent, and we tell you we're gonna do 8-12 of those a year. So you think about 800,000 sq ft-1.2 million sq ft. One year could be 800,000; next year could be 1.3 million. So it's gonna shift. We are committed to deliver this in an asset-light approach. So basically, the total cost of this, whether it's the landlord builds it, it's part of the office, they spend the money before, we basically are aiming for net invested capital in these things for every 100,000 sq ft, between $25 million-$30 million, no more than that, on average. Again, we may decide to spend $60 million in one and $5 million in another one. So those are all depends on what's best for the particular situation, but on average, it will be about $20 million-$25 million to $30 million net invested capital to every 100,000 sq ft. And as Eric covered that, about a 30%, 32%, 33% return on that net invested capital. To make sure this story doesn't get more confusing than it has become over the last several years, is we need to kinda channel everybody to this way of thinking. You need to afford us the flexibility that we know what we're doing. We know how to design, solve problem for other people's real estate problems, and as a result, get amazing opportunities to grow our business. Does that make sense? So the way to think about it is this large format equivalent of about 100,000 sq ft. Think about 8-12 times that 100,000 sq ft with those type of metrics I just gave you. Does that help you? Yeah, that makes- Okay. I guess just one quick follow-up to that since we were... It's me, Bahram. Right here. Okay. Yeah, of course. Just one quick follow-up to that, since we talked about the net capital investment. Are you guys able to kinda share the mix of that that's coming from TIs versus the sale-leasebacks? Like, is it fair to assume more it's gonna come from tenant incentives versus sale-leasebacks? Are you guys able to kinda quantify that, the mix? Historically or going forward? Going forward, and what's embedded in the 8-12. So it's a pretty good mix. I mean, on our tenant allowance deals, we're getting more than, you know, more than half of the cost of that project in terms of proceeds, and then, you know, for our own sites, you know, when we sell those, we're roughly getting, you know, 75%-80% proceeds. So like PJ said, it all just depends on, you know, which ones we're at and how those end up. But we get, in both cases, we get significant proceeds. Yeah, and we can't commit to any of that to you. Let me walk you through this. There may be—we're doing clubs where we end up having zero net invested capital in, and we basically buy something, fix it up, take a sale-leaseback, get all of our money back, plus $5 million. We have locations where we wanna go into, they're amazing locations, like Edina, and we're getting the building, we're getting the land, we're getting the parking, we're getting amazing infrastructure, but we accept less TI, and we put more money out of our pockets, okay? Because it makes sense to do that there. There is no way to sit down and tell you guys, "This is the exact way that we would offer." We don't have one idea or one formula. We are a flexible real estate entity, so we will adjust those. The only thing we can tell you, it's gonna average about $25 million-$30 million net invested capital times every 100,000 sq ft, and then we maintain all the flexibility for us to how to navigate through that. Okay? Yes. I'm Ricardo Chinchilla with Deutsche. I was hoping you could provide us with some information regarding the evolution of your balance sheet. Can you please comment on the timing of a potential refinance, if you want to do, you know, additional sale-leasebacks prior to the refinance? And if you're considering changing the mix between, you know, fixed and variable debt and between secure and non-secure. All right. So it seems like you're trying to get inside of my head for the last six months. So we have a clear path of what we're working on. We have a very, very attractive interest rate on our senior secured, which we really need to get done prior to the audit next year. Which is so we don't, we have plenty of options. If you talk to any of the partners of ours, banks in here, everybody will tell us we could go and refinance our debt today. All I'm going to tell you right now is our plan is to refinance with our accumulative interest rate going down, not up. I'm not gonna provide any more information than that. I'm just gonna leave it at that. We're working on all various approaches to figure out how we will execute with interest rates going down. We'd like to improve our credit, metrics, and rating, and then get this done. It's all in the works from as of months ago, been working on it till today, next week, next month, all the way through. We do not have to redo our debt, obviously, before end of this year, okay? Really what you would expect, something is done before the 12/31, so that it's within a year before the majority maturity of the debt, and you can be rest assured it's gonna get done in that timetable. With the objective of having the interest rates, the cumulative interest rate to actually go down. Perfect. If I may follow up, have you guys identified the optimal mix between, you know, the clubs that you fully own and the ones that you lease? Or like a target of how many clubs do you really want to own versus- Yeah, I will, I will take that. So the... We have leased most of the new clubs since 2015. As you can see, everything we have developed after 2015, majority of them have gone to leased situation or been leased upfront. That is the path forward. We own roughly around 60 assets that some of them, about 50 of them, are old enough that they have been depreciated significantly on our tax base. And when I look at a 2-, 3-, 4-year, 5-year window, we're gonna be paying taxes, you know, if not by middle of next year, we'll be paying taxes, you know, basically. So we don't wanna give up our loss carryover just by selling this real estate and recognizing big gains, okay? The way to do it is when we build a new facility, we don't wanna sell the whole thing because then the rent will be too big. We wanna sell it below what we invested, so leave maybe $20 million-$25 million. On paper, that can look like a loss, and then I can--we can offset that with selling one of our great assets older. The goal, the goal here is not to recognize big gains or big losses, to muddy up the water on how amazing our core performance is, and not leak any, any cash to taxes where we don't have to. So balancing that, so as we get new products come online, complete them, open them up, get ready to go to sell-leaseback, we can couple that with an older asset, so that offsets the n-those. So we have the opportunity to do, you know, realistically $1 billion of real sale-leaseback over the next, call it 4, you know, 3 years-4 years, and that would be mix of new and old. Then we will still own equivalent of $2.5 billion-$3 billion worth of real estate that we will always end up owning. Rather, not on a book basis, but on market value basis. Now, why do I like that? Why should you like it? Think about Life Time throughout the difficult times. Think about Life Time after we got shut down in May, March 16, 2020. Because of our relationship with our partners, we closed a sale-leaseback for $80 million two weeks later with our friends at Realty Income. Two weeks after all clubs were shut down, no revenue for the company, for $80 million. Having these assets is an amazing security blanket for us, for a company that wants to be here for 100 years and continue to serve people with healthy and happy objectives, and for you to know that we're not going anywhere. We're not like other companies to be potentially bankrupt, if, you know, XYZ doesn't happen. The company is extremely solid financially because we have that base of owned real estate that provides incredible security for our company. But forward path is really no more than $25-ish million of net invested capital per every 100,000 sq ft. Does that help you? Okay. Yes? Okay, he's got it. He's got it. This is Michael Hirsch from Wells Fargo. So I noticed that the median household income is $157,000 currently, that's up around 10% since the end of last year. So I'm wondering what's driving that, and and could you talk about the health of the consumer at the lower versus the higher end? Yep. So that's a great question. Our median household income of our customer is higher today than when we put those numbers up. As our membership pricing is transitioning, as the churn is transitioning, with a higher price customer coming in, it's a more affluent, more high-end customer who's coming and taking place of somebody older. So that demographic is gonna continue to improve based on the strategic shifts that we have put in place already. So it's constantly improving. We are not seeing—You know, we've been going through this. We haven't seen any, any sign of a customer being tired. I have anticipated, frankly, for about a year and a half, I've been thinking this customer is gonna run out of gas, run out of gas. We haven't seen anything. Nothing whatsoever. I mean, what we've seen in the clubs, we are having record number this month, record number over last month, last month over the month before in personal training, which is the number one biggest expend. Cafes and the spa are performing based on our execution, the limitation is our shortcoming on execution, not the customer not being able to spend the money. Okay? Got it. And also, on the Life Time Digital subscriber growth that you've seen recently, could that translate into any incremental center memberships or other financial benefits? Okay, that's a brilliant question. So let's talk about this. What we did in the past is when our customer canceled their membership, we killed their app. That's what we did till literally 6, 7 months ago. The strategy for us now is to accumulate subscribers. We own, I think, 300 million race results, and maybe about 40 million roughly unique people in our database for Athlinks, it's a company we own. This is if you've ever done a marathon, triathlon, this or that, you can go to athlinks.com and look and put your age, name, et cetera, and pick up your information. We have all that. What we are doing now, we literally have hundreds of thousands of spectators and tens of thousands, you know, from so many of our events, athletes, when we go to Miami Marathon or Sea Otter or Leadville Race Series or Unbound. What we have now focused on bringing in different channels, where people to engage with anything they wanna do with Life Time. If you wanted to bring a guest of yours in the past, they would just come to the club and sign in at the door. Now, they have to load up the app, you send them a QR code, they come in with that app. So we have this natural catch basin to build a much bigger database on our digital LT Digital. So it can grow, roughly, as Freddy said, about 100,000 new subscribers a month without us having to spend any dollars getting those... You know, if you look at digital companies, they got to spend a lot of money to get new subscribers. We don't have to spend anything. Once you sign up on the digital subscription for a Life Time, there's really no reason for you to drop off. You can pick up great information, it doesn't cost you anything, you don't get bombarded with advertisements or notifications, and you may wanna come back if you came in today as a guest, maybe six months from now, you wanna go to that club, two months from now, you wanna go back to that club as a guest, there's no reason for you to drop out. So our goal is to grow this subscription to 2 million, 3 million, 5 million, 10 million, continue to provide incredible content, like meditation or streaming classes or on-demand, where other folks trying to charge for that subscription. We don't have to charge for it. We can just give them that amazing content all in one place without... And just basically getting that. Now, if you want to rejoin Life Time, today versus a year ago, it's much easier. You have maintained your app, you can just go in there and quickly re-sign up. You wanna buy one of our protein shakes, you can just go back in there, your data is in there, you can buy it. So it will become... Again, we don't need this at all for any extra revenue or EBITDA this year, or frankly, even next year. The core business is gonna deliver. This is just an opportunity to build a huge database, huge network, provide great information to people, and then if they wanna transact with us through our LT Shop or through the clubs, they can do so. Does that help you? Okay. Pankaj Chandak from Granite Investment Partners. So two questions on churn. What are we doing to drive the downloads, and any data on how that can impact our pricing power or the churn? On our churn of memberships? Yeah. Okay. Any of you guys wanna take this? What the churn on from... I didn't hear the first part of it. How do you drive the download of app? And if someone has app for that cohort, is the churn lower, or do you have a better insight into the pricing power with that customer? Yeah. I don't know if they have the app. So, all right, so let's go through this. Today, we still get about 25%-30% of our members that join are rejoins, if that's what you're going after. But it was a little more difficult for them. They had to go back through the whole process of re-signing up. With the new idea is their account number remains. They don't lose the account number. If they have signed up, they drop out, they get to keep the app, and when they come back, they can just re-sign up. Now, they re-sign up with new rates. They don't get to keep their old rates, but they can sign back up much easier than they did before. They don't need to connect anybody; they don't need to call anyone; they don't need to reach out. They can just completely redo it. We believe it will dramatically improve the experience of the customer, therefore it should increase the demand for the company. Okay. We visited some stores in Orange County. They had a wait list. Is that an exception, or is that a sizable sort of store base with the wait list? Yeah, that's a great, that's a great question. We have roughly about 50 of our clubs that they're either are on the wait list right now, or we are attempting to get there based on training the team, from the lead general to the MCL, PTL, to make sure they're prepared on handling the process of the wait list. It's not easy. We do not wanna make our customer feel like we're, we're having an attitude about this. We, we wanna serve lovingly, but if the club is full and we can't take him in at certain times, we wanna be able to engage with them upfront, let them know how we can get them in. So the training and implementing the right processes for our team to be able to actually transition the club to a wait list is what's in the process right now. Every week, our team is working with more clubs who wanna get on a wait list, but make sure they have the know-how on how to handle every single customer. The process is that if you want a wait list, you get contacted by one of the key people in that club within an hour. So we have to implement that, we have to rehearse it, practice it, before we can actually let them. But we have more clubs that can go on a wait list as of right now. How would you compare this number with, say, five years ago? Is this an important cushion, sort of as we manage, so the pricing increases or even the difficult macro environment? So let's put it this way: It's the ultimate, it's the absolute ultimate state that you would wanna be in. You wanna be in that position where you can get the club to a wait list, and five years ago, we had none. We had no club on a wait list five years ago. So it's just a transition that is happening based on the best version of Life Time we're talking about over and over, the best classes, the best programming, the best experiences. It's making the brand. Look, I have always wanted to build a brand, not a company. That people want the brand. This is the brand extension, the brand opportunity is what we've been working on. And this team, as I mentioned to you, with my huge grad system, they have been passionately executing that experience so that we can build the brand, that people want the brand. So the landlords want Life Time, Lululemon, HOKA, the, you know, Hyperice, all these different companies want a relationship with Life Time. It's because of what this team has accomplished. They have created that brand where everybody wants to engage. Real estate- I would just add on the wait list, you know, you're talking about what it does for them. I think from a desirability standpoint, going back to that, we're going on a wait list 'cause as Bahram said, these clubs are busy enough. And when we announce a wait list, our existing members are thrilled about it. It proves our commitment to them and their experience. It also helps attrition, because now people don't wanna leave and then not be able to get back in. So it really is a huge boon to what we do. Yes. Sorry, right here. Bahram, real quick, we have about four minutes before we hit 11:30. These guys could ask you questions till tip-off of the Timberwolves game. So I think we have time for one more question and then closing comments, and then we, we have lunch- Do we have to shut it off? Is there any real big demand to have - Okay, let's let them ask their questions. Let's go ahead. ... So I guess at the midpoint of your long-term, LGOs, 10 or so stores a year at $27.5 million, so two hundred and seventy-five million a year on growth CapEx, and then you guys gave that 30% return target. So is it, oversimplified way to think about it, but the growth CapEx you're spending today, once those stores reach maturity, that $275 million you spend today, once they ramp to maturity, you're getting, like, $80 million of incremental EBITDA. Is that a fair- That's right. Well, yeah, once they mature, correct, you're getting that 30%-35%. That's correct. That is correct. It's a great question, actually. Next? Yeah. I think they're super quick. Just the subs going from 200,000- 600,000 in a month, is that just the re-sub of the digital subs? Was that just kinda re-subscribing the lapsed old members, or? That's sort of number one. It's a big number. Is that so- it's a- Well, you don't- So it's gonna grow about 100,000 a month naturally. That does not... So look, we, at some point, we will communicate with all of our AthLink customers, that if they wanna get that information, instead of going to the website, they've got to go to the app. So there are other techniques, other channels we have to increase, but we have about 80,000 guests per month, and 20,000 or so, past members a month, plus these other venues of the athletic events and our data, et cetera, et cetera. And then there's natural sign-up. People, now that they find out, they can actually go through, you know, and just load up the app and get all that information, and none of it has really broken out. But once this becomes a common knowledge that I can have amazing classes through Life Time app, and it doesn't cost me anything, why wouldn't I download that? Why would I pay $40 a month to somebody else to get the same thing? Yeah, I think it's great. I just wondered if there was this one step up, and I- No, it's happening because we literally started working. We had envisioned this long time ago, but we didn't launch the idea of going through the free digital till beginning of this year, end of last year. And then it's just taken a couple of months, 2, 3 months, of getting things set up, and really, the big, big shift took place just 2 weeks ago, and results are going like this. I'm sorry I lied then. It wasn't quick. So are you saying it's just viral? That, wow, this is this great value prop, and so subs are going from 200 to 600 in a month? No, it didn't go 200-600 in a month. Sure, it looks like it did. But in the last six months, it's gone from that number. It's about 100,000 a month. From here going forward, we- Got it ... anticipate it will be roughly $100,000 a month. Okay. That's not viral. That's just normal mechanics. I have no idea what happens if it goes viral. Got it. Okay, just give us a little granularity on two things. One is, when you raise my price, you know, if I'm on the airline seat, and my price just went up, and his didn't, you know, how do you communicate that delicately? And sort of similar question on the, I'm on the waiting list. You said, "Yeah, somebody's gonna get a call." What do they say? What's that process? How long do I typically- Do you wanna come work with us? Is that, is that what you're doing? All right. So, look, the wait list, the idea is 100% connectivity with every member, and this process allows us go from maybe 20, 30, 40, 50% connectivity to damn near 100% connectivity. Because that connectivity take place for you to actually get started in the club, so what we like, okay? It's a better engagement with our customer. The other question you had was? The second question, price increase. Price increase. So the price increase works like this. Yeah, so this club, this club right, right here, effective right now, is $199 a month. When we opened this club in 2005, it was $59 a month. Those customers who have been there for the whole time, they may be today paying, because we've taken them up $3, $4, $5, $10, they may be paying $119 a month. They're still $80 off from the rack rate today. As we've told you before, we're not gonna raise their price more than about 10%, so they maybe they get a $10, $15 price increase next year. It's gonna take a long time before they get to the rack rate. We've been doing this for 30 years, and nobody is complaining that, by the way, that somebody else got a lower price increase than I get. Everything's done via AI, everything's done with the customer in mind, and we make sure the customer still feels great about Life Time after their rate went up. Usually, they get a letter saying that, "This club now is at $199. You're paying $129. We're gonna take you to $139. We're still giving you a great value proposition." That's how we do it. All right? Other questions? Yes. Owen Lau, Northland Capital Markets. Can you speak to how much quicker these new club launches are reaching optimized membership levels as compared to legacy clubs? How close are you to that optimized membership level prior to the new club launch? It's a great question. These clubs are ramping significantly faster than what we used to do in the past, but a lot of it is a function of the brand I mentioned to you. The fact that people want to be part of Life Time. So when we start construction for a club, this website for that club opens up, and people can just go and say, "I want to join this club." We get anywhere from 4,000-5,000 to maybe even 9,000 people, the biggest I've seen, 10,000 people on a wait list for a club. So then, instead of having to spend advertising dollars to send them direct mail, these people, to try to get the interest, we will come to a new club today, we're basically just having... You know, we used to start the presale a year in advance. We used to start presale six months in advance. We literally now start the presale 60 days, 90 days maximum in advance of the club opening, because we just really don't need to do those. It's much more efficient, much less costly, and then we reach out to those people, and we basically. The clubs now open with huge demand and, and many times they get to cash flow positive on an operating level, at the club level, literally within about 60 days. PJ, you wanna talk about some examples? Yeah. I mean, we recently opened a club in Red Bank, New Jersey. It had, you know, over 7,000 people on the wait list before it opened. What's different in our wait list now, we just tell you that we're coming, and you can join a wait list. There's no pricing information on that. So we may have assumed Red Bank would open at $259. You see that type of demand, we're selling right now at $299. We opened with... I'm not sure I should give exact numbers, but more demand than we've ever seen on an opening day of the club. That club actually opened on a wait list just to control that demand, and within the second month, it is cash flow positive at the club level. That's not unique to Red Bank. It's, you know, we just opened a club in the west part of Denver West. We just opened up a club in Las Colinas in Dallas. You know, we're opening in Tampa. That one, that one is what Bahram's referencing. You know, maybe we can have 2,500 memberships; we have 10,000 people on our wait list. It just helps us have the right curated number of members when we open. It helps us get to cash flow positive infinitely faster than we used to, but I think one of the most important parts is that it really allows us to control our pricing. So we're never in a position where we started selling memberships at a lower rate than we should have, and that demand right now, luckily is extremely consistent, regardless of the location or type of club. The biggest mistake that we have made in the history of the company is selling the clubs way too cheaply. It created all kinds of problems for us, and today, we don't ever have to make any guess. We don't have to guess anything. We actually know exactly where we need to land because of the approach we are taking to launch a club. So, things are gigantically better than what we did 10 years ago and 15 years ago. There's just, there's no comparison, in terms of the way things have curated. But I also emphasize, going back, we manage the experience. Most important thing to us, to make sure the club launches, and every single customer who comes in loves their experience. I want you guys to take a trip to Denver West or go to, to Middletown, or go to any club that we're opening and ask people, first week, second week, third week: "How do you feel about your experience in the club?" And as long as we win on the experience, we will win on the financial results. Okay? Hey, Mark Jordan from Goldman Sachs. Thanks for squeezing me in here. We touched upon this briefly in the Q&A, but Bahram, you started your prepared remarks by discussing the importance of taking a long-term view of the business, and you outlined the flexibility of the model. Let me get that closer again. Yeah. This good? Yeah, it's good. All right. So you talked about the importance of taking a long-term view of the business, and you outlined today the flexibility of the model over time. With that in mind, if we look out 10, 15 years, what's your vision for the company, and how different does it look from today? I love it. I love it. I, I thought nobody would ever ask that. What do I think? I wanna... I wanna know that Life Time has operated like the companies who've been around for 50 and 100 years, that has delivered commitment to the team member and a member and investor and lenders and, and landlords. I want this to be one of the top brands in our country, period. That would make me proud of accomplishing something. I wanna see a team that is figuring out that if they do the same thing today as they did yesterday, they are going to become obsolete. They're gonna be gone. They may not be recognizing that they're going to be gone, but they're gonna be gone. We need to adapt. We need to adapt. We need to adapt fast. We need to think about the big opportunity within a large mega trend, right? AI is a mega trend. It's, it's here. You can't fight it, so you join it. You think about it. It's like everything else. It can be nuclear. It could be really bad, it could be really good. So you have to accept, and but you have to, you have to embrace and go... We need to embrace transition. One thing is constant, is the speed. One thing's for sure, is that the speed of change is accelerating, and for any entity, for any human, for any creature, for any company, you need to learn to adapt faster and faster and faster. One of the complaints we got when we do internal NPS was exactly the same thing that we got as the number one—so the, the, the worst detractors in our corporate office and the best prom—the, the best promoters were the same exact thing: "There's too much change here. This is always changing." So the team who was here knows it's gonna change. It's gonna change on a dime, it's gonna change fast. We are constantly looking to see how we can evolve and get better. So 15 years from now, you're gonna see a company that's serving tens of millions of people across the world in all aspects of healthy living and healthy aging. It could be all the stuff we're doing with Al and, Dr. LaValle and with Miora. Could be hormone replacement, it could be giving you better looking... I, I'm gonna need some more hair or something. I don't know. However way we can serve people to live healthier and happier, we're gonna keep working on that. Healthy and happy, megatrend. The way we're gonna get to it, we need to adapt and change. Does that answer your question? Yeah. All right. I wanna thank you guys all for coming. Hopefully, you guys have enjoyed your time with us here, and we have been able to shed some light on some of the things that have been maybe not quite as well understood with the company. Thanks again. Look forward to enjoy some time with you guys right now. Thank you so much!