Greetings, and welcome to the Life Time Group Holdings, Inc. First Quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dani Matzke, Vice President of Corporate Finance. Thank you, Dani. You may begin. Good morning, and thank you for joining us for the Q1 2024 Life Time Group Holdings earnings conference call. With me today are Bahram Akradi, Founder, Chairman, and CEO, and Erik Weaver, Senior Vice President, Interim CFO, and Controller. During this call, the company will make forward-looking statements which involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today. There's a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review. The company will discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as net debt leverage ratio and free cash flow. This information, along with reconciliations to the most directly comparable GAAP measures, are included, when applicable, in the company's earnings release issued this morning, our 8-K filed with the SEC, and on the investor relations section of our website. With that, I turn the call over to Erik Weaver. Erik? Thank you, Dani, and good morning, everyone. We appreciate you all joining the call this morning. I will provide an update regarding our first quarter results, the full details of which can be found in the earnings release we issued this morning. We are pleased with the strong financial results we achieved this quarter. Total revenue for the first quarter increased 16.8% to $596.7 million versus the prior year, driven by a 19% increase in membership dues and enrollment fees and a 10.5% increase in incentive revenue. Access memberships increased 5% to end the quarter at more than 802,000 memberships, and total memberships ended the quarter at approximately 853,000. Average monthly dues were $186, up 12.7% from the first quarter last year. Revenue per Access Membership increased to $745 from $667 in the prior year period, as we continue to benefit from higher dues, increased visits, and increased in-center activity. Net income for the first quarter was $24.9 million, down 9.5% versus the first quarter of 2023. Q1 2023 net income was elevated as a result of one-time net benefits of $8.7 million related to the sale-leaseback transactions and the sale of two triathlon events. Adjusted net income was $30.5 million, an increase of $7.3 million versus the first quarter 2023. Adjusted diluted earnings per share was $0.15, compared to $0.11 per share in the first quarter last year. Adjusted EBITDA increased 21.6% to $146 million, and our adjusted EBITDA margin of 24.5% increased 100 basis points as compared to the first quarter of 2023. Our strong financial performance continues to drive growth in cash flow and a reduction of our net debt leverage versus the prior year. Net cash provided by operating activities increased 21.7% to $90.4 million as compared to the first quarter of 2023. We reduced our net debt to adjusted EBITDA leverage to 3.6x in the first quarter versus 5.2x in the prior year period. We're excited about the continued execution and success of our business. With momentum on our side, we are very optimistic about the opportunities in front of us in 2024. I will now turn the call over to Bahram. Thank you, Erik. As you would expect from what you just heard, we're especially proud of our continued progress, and it is my pleasure to provide a little color with respect to the numbers Erik shared with you. Addressing revenues, we were pleased with the $597 million we achieved for the first quarter, nearly $2 million above the top end of our guidance, with the outperformance derived principally from incremental membership dues and Dynamic Personal Training. Adjusted EBITDA of $146 million was at top end of our guidance, and we achieved a 24.5% adjusted EBITDA margin for the quarter. As pleased as we are at our progress here, we're going to reiterate our previously issued adjusted EBITDA margin expectation of 23.5%-24.5% for this year. Consistent with absolutely normal, predictable seasonality, a portion of the revenue gain we anticipate for the middle of every year will be from summer activities, which generate incremental EBITDA, but at lower margins. Even more gratifying, Access Membership at the end of Q1 2024 were 802,000, which is substantially above our expectation. This overperformance has been a direct result of the strategic initiatives we have previously discussed with you, which include pickleball, ARORA, and small group training... and the improved member retention we're currently experiencing, which is the best we have ever seen. Additionally, we believe we had some membership pull forward into the first quarter from the second quarter, as some people joined earlier in anticipation of the pool season. Average dues were $186 a month, in line with our expectations. Based on the positive trends we're seeing in our business, we're raising our revenue and Adjusted EBITDA guidance modestly. Our full year's revenue guidance is now $2.5 billion-$2.53 billion, and our Adjusted EBITDA guidance is $603 million-$618 million. Our priorities for this year remain: growing revenue and Adjusted EBITDA per our guidance. Second, delivering positive free cash flow. We're on track to achieving this objective during the second quarter, and we expect to remain free cash flow positive going forward. Finally, reducing our net debt leverage ratio to under 3x, sooner than later, and certainly before end of the year. Lastly, I want to personally thank each and every Life Time team member for your relentless commitment to delivering the ultimate experience from the member point of view, which drives the amazing financial results we're enjoying today. Thank you. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question is from John Heinbockel with Guggenheim Partners. Please proceed with your question. Hey, Bahram. I wanted to start with engagement, right? So I know you've given that metric, and that continues to improve. I think it was 135 a year, last we heard. So what has continued to happen with engagement? And, you know, you mentioned Dynamic Personal Training. How do you guys think about wallet share with in-center revenue and the opportunity there? 'Cause obviously, your members have a pretty big wallet. Thanks, John. From a personal training standpoint, our Dynamic Personal Training really has been some initiative we launched almost two years ago. I've been working on that brand, and we really have amazing success with it right now. We have almost double the number of personal trainers applying each month, as they did a year ago. The momentum is strong, the execution is the best I've seen, the casting is great, and we are really extremely pleased with what my team is delivering right now. We are seeing continued growth and engagement in the personal training. The connectivity between the members and personal training is improving. And so that was the most important piece of our in-center. As we've talked about before, the kids' programming has been great, summer camps have been great. Spa and cafe have been the focus for this year to improve, and we have tons of opportunity there, and we're seeing really the initial baby steps in improvement in those as well. So at this point, John, we just really have a very, very optimistic view of how all these programs are coming. From an engagement standpoint, we're seeing the most engaged customer that we have ever had in the history of the company, which directly resulting in the best retention that we are seeing, and it's continuing to trend better than our own expectation, which is pretty awesome. Great. Maybe as a follow-up, right, without stealing thunder from your analyst day, but I know you recently, I think, introduced this concept, right, of large format equivalent clubs and how you wanna think about the pipeline. So just maybe at a high level, how do you think about that? And obviously, you can mix and match, right, you know, urban, residential and office buildings, and you have a lot of optionality. But how do you think that plays out over the next two or three years? Yeah, that's a great, great question again, John. At the end of the call today, we're gonna talk about our investor day that we're planning and give you full details of that for May 30th. Our goal is to flesh out the description, but in a nutshell, we, as we've stated before, have the same expectation on the levered rate of return out of any type of facility we do, which is roughly between 30%-35% levered return on our invested capital, net invested capital. Whether if it's upfront, you know, investment coming from landlords or building owners, et cetera, or if at the end with a sale-leaseback conversion. The net invested capital that we're looking for is always between 30% and 35%. And what we're going to do on that day is demonstrate to everybody the variety of examples of all of these-... are the same. So then to try to eliminate the confusion for the investors, our target is between 8 and 12 LFEs in a given year and really averaging about 10 per year. Now, a lot of these things, as you know, they have very long gestation time, so sometimes you may have a year that comes in on that lower end, the 8. That means a couple of those clubs that should have opened that year would have some delays in it, so the following year, we should do 12. So for modeling purposes, what we're gonna guide everybody to, is to about 10 LFEs per year. And the remainder of what it takes to deliver a double-digit, you know, 10%+ revenue and EBITDA growth. This is not for this year, obviously, based on what we have just guided to, it's much higher than that. But for 2025 and beyond, to get to the 10% revenue and EBITDA growth, we will then need to have about 4%-5% of that come from the same store, and the rest of it needs to come from additional, LFE expansions and other initiatives that we have in place. And we feel really, really great about our strategy, outlook, and the execution of our team. Yeah. Hey, John, this is Erik. If I could just add to that, I think another key benefit of, you know, the various formats here is our total addressable market is substantially bigger. And I think that's one thing that's very important as we continue to think about our growth. Great. Thank you, guys. Thanks. Our next question is from Megan Alexander with Morgan Stanley. Please proceed with your question. Hey, good morning. Thanks so much. Good morning. I just wanted to. Thanks. Just wanted to follow up. You know, Bahram, you alluded to it a bit in terms of the updated guide and taking it up by more than the one Q beat. You talked a little bit about it, driven by current trends. You also talked about some pull forward in membership into one Q. So maybe, can you just give us a bit more color on what's exactly changing in the outlook? Is it, is it that you're getting some of these pool members a bit earlier, which tend to have a higher, a higher dues number, given the pool activation fee, and you're just getting more revenue out of them over the season? Or maybe just, you know, to help us tie those comments together in terms of what's changing in the outlook. Yeah, that's great. So the most important thing, Megan, is retention. You know, we, we keep going back, we keep going back and emphasizing to everyone that it's a high-end leisure business that is based on subscription. The most important factor, the most important KPI, is retention. And we are trending to roughly 10% better retention than we have had ever in the history of the company. And that alone allows to see that our forecast for our dues is basically significantly higher than three months ago at this point, and therefore, our forecast is just purely based on facts. Our guidance is purely based on our forecast, and the forecast just easily suggests we should be able to deliver the numbers we just guided to, both on top line and bottom line. Okay, that's helpful. Thank you. And then again, you alluded to this a bit. Wanted to talk a little bit more just about the EBITDA margin. You know, center OpEx was a bit higher than what the Street was looking for, and you didn't take the guide up as much, on the EBITDA line, so maybe not getting the leverage on sales. It seems it's driven by where that upside is coming from. But I guess just bigger picture, you know, what are you seeing in the costs of the club and how are those trending? And is there some gating factor to getting EBITDA margins above 24.5%? You know, is this the right level for the business? How should we think about that a bit longer term in terms of you letting that EBITDA margin kind of drift higher over time? Yeah, let's go through this. We are extremely happy with a 23.5%-24.5% EBITDA margin. Our focus is always to deliver the best member experience and a long, long-lasting enduring business. So what I'm really proud of is the work that my team has done here. We reinvented this business over the last four or five years with a clear vision that the business is not gonna be going forward, the same as it was before, all the decisions that was made during the last four or five years. We anticipated higher costs, we anticipated higher and higher interest rates, we anticipated way more wages and much, much higher construction costs, development costs. Therefore, we made the proper adjustments. We made all the necessary adjustments. The EBITDA plus rent margin is now roughly 5% higher than it was at our banner year of 2019. Therefore, we have all the margin, all the latitude, all the space to pay a little higher cap rate for our sale leasebacks and get those deals done. We have the ability to cover all the increased payroll, so we can continue to hire the best talent and pay them what we need to pay them to keep them in the clubs. The business, the new business model, the whole model, inclusive of all these increased costs, are superior to the model we had 2019 and before. All of it has been anticipated. There is no surprise, and we are super happy. Is there a chance that the EBITDA margin could be more than 24.5%? Yes. Do we want to guide you guys to that right now? Absolutely not. So we're just giving you the 23.5%-24.5% firmly, and making sure that we can deliver our objectives and our promises through that range. Great. Thanks, Bahram. Mm-hmm. Thank you. Our next question is from Brian Nagel with Oppenheimer and Company. Please proceed with your question. Good morning. Good morning, Brian. First and foremost, congrats on another nice quarter. Nicely done. Thank you, my friend. So, Bahram, the first question I have, you know, we talked a lot about driving the business towards free cash flow, positive free cash flow. You reiterated that today, these ratios are coming down. Anything you could talk or any color you can give us on how you plan to- your plans to address the, the debt on your balance sheet that comes due in early 2026? As you would anticipate better than anybody, Brian, we're always months and months and months ahead. We're working on those things right now. We do have all sorts of things planned out. Our expectation is that debt will get done sooner than later, with much better interest rates for our next year. And we have had the most massive club opening in the first half of the year instead of spread out or the back half, like I've seen some years this year. So we just opened three or four amazing, successful clubs, beating our expectations, beating our records in every case, but we spent a lot of money to get those opened up. But as we go to the second quarter, you're gonna see at the end of the second quarter, the shift where we deliver Free Cash Flow positive this quarter. That's after all growth capital. We start seeing the debt coming down, the debt to EBITDA, Adjusted EBITDA coming down pretty nicely from this quarter forward. And so we are absolutely thrilled. We are exactly on our plan or better in every case. That was very helpful. I appreciate that. And then my follow-up question is bigger picture. Again, we're looking at the results, your comments, and the business seems to be performing extraordinarily well. The question I'll ask, I mean, just given market concerns of consumer, economic, et cetera, I mean, as you look across the business, in particular on the membership side, are you seeing anything at all, anywhere, to suggest a more cautious member within your model? So every month... It's a fantastic question, Brian. I'm glad you're asking it, and I'm thrilled to answer it. Every single month, we're seeing a record month on our personal training over the month before. We're seeing record retention over before. We are getting more clubs, as I told you guys on the last call, going on a waitlist. It's only simply a function of making sure we still deliver member point of view and that sort of the highest quality leisure companies, that you can possibly expect in terms of service level. That so if people wanna learn about Life Time, they get the most amazing reception. Yet we do have to, you know, hold the memberships back a little bit to deliver the experience we want. We wanna handle that correctly. So the only thing we're taking is time to train our leadership in every club, when they're ready to put their clubs on a waitlist, we're putting more clubs on a waitlist. So honestly, we have more demand than we're, you know, we're concerned about. I have personally expected to see some weakness for the last 18 months, and I have been wrong. I have been wrong and wrong and wrong, and we kept thinking, this customer is gonna get tired, they're gonna get tired, they're... We are not seeing anything. In fact, the only trend we see, again, I just- I emphasized this before, Brian, you know it, the most important key KPI is the retention, and we are seeing the best retention we've ever seen. Very helpful, Bahram. Congrats and, best of luck with the rest of the year. Thank you so much. Our next question is from Alex Perry with Bank of America. Please proceed with your question. Hi, thanks for taking my question here, and congrats on a strong quarter. I guess, just first, Bahram, maybe following up on your last point, can you give us an update on how many of your clubs are on a waitlist? And are you considering raising prices where demand continues to exceed supply? Like, what's sort of the pricing outlook that we should be embedding for this year? Thanks. ... Two great questions, Alex. Great to hear from you. The one thing I wanna make sure we don't create a pattern for, is creating a metric around how many clubs on a wait list. So this just becomes one more thing that people get focused on. It's just what we wanna insinuate to you guys, is that we're getting more clubs, getting to that point where to manage the experience for the customers who are already in, we have to be thoughtful about not just having a free-for-all for people dropping in, right? So the wait list is allowing us to, you know, sort of gauge the inflow of the new members in the busy clubs. All I can tell you right now is we literally are getting as many clubs on a wait list as we can have our team and our processes properly in place to execute that with a high execution level. So I don't wanna create a metric, but I can tell you by end of this month, we'll be nearly 3x-4x how many clubs are on the wait list, you know, just, just at the end of January. So it's... but it's really a function of us being able to roll it out without creating an attitude that we're too good or anything like that for the customer who loves Life Time brand. That's really helpful. And then my follow-up question was: You made a comment in your prepared remarks about, you know, a bit of a pull forward into Q1 on center memberships. Maybe just help us think about how we should be thinking about the second quarter on any sort of key KPIs, I guess, on center memberships specifically, and what do you think sort of driving that pull forward? Is it due to people being worried about, you know, getting into the club during pool season because of the wait list? Thanks. Yes, I think it's a function of that and the fact that we normally have a summer pool pass, sort of implementation in the busier clubs. We charge a fee to get the people in to sort of discourage the people who join just for those three, four months, which we have happening every year. So you guys know we have a big sign-up May and June, and then we have a big dropout September and October, which we really don't like. So we're always trying to figure out a way to discourage that behavior without, you know, without making the customer feeling alienated. So in the past, we have introduced this sort of, starting from April, we layer in some fees for the pool, and then it just, it accelerates into May, June, those fees goes up higher. So some people who have the pattern, they know they wanna join for the summer, they're smart enough to join end of March and not avoid paying any of those fees, but they're paying an extra month to do so. At the end of the day, it all works out. I just wanna caution the analysts and investors on the fact that we, our overperformance on membership, you know, I just didn't want people to just take that and multiply it for every quarter going forward and get ahead of our guidance on the revenue and EBITDA. And then again, you have a choice of doing what you wanna do, and we're just trying to make sure we give you guys the best information and the best guidance possible. Perfect. That's very helpful. Best of luck going forward. Thank you so much, Alex. Thank you. Our next question is from Simeon Siegel with BMO Capital Markets. Please proceed with your question. Thanks. Hey, guys. Morning. Hope you're doing well. Good morning, Simeon. Bahram, Bahram, I was hoping to follow up on that a little bit, actually, because, I mean, it's interesting. So, so one, is it, is it new, this idea of people are signing up earlier to avoid these fees? And, and maybe does that help smooth out seasonality a little bit? Does it give you a little bit more predictability if you are now bringing those people in earlier and keeping them for longer? Or is it, or is it normal, and there just were more people that did it? So maybe any, any context around that, any way to quantify how many pulled forward earlier and whether this is going to be just a new dynamic and it's smoothed out the seasonality? Yeah, I think, I think if you take the number above the number that was consensus, about $795, that's about $7,000. I would say it's about 50/50. About half of it was extra pull forward, and the other half was basically better retention, et cetera. So we're... You know, we're cautious on all of this, Simeon, because really, the- no, so we're balancing on what the Street may want, but more so on what our customer reaction is to our company and our team member. And I just can't emphasize how pleased I am with the, with the overall feel and the health of the business. The clubs are busy, the members are happy, team members are in a great place. We're getting more and more amazing, qualified people come in, wanting to be a part of Life Time. I just really don't see any negative trends. At the same time, we just wanna make sure we deliver a balanced tone in terms of not getting ahead of ourselves, in terms of anything. That's it. Okay. Well, yeah, that makes sense. I guess my point or my question was: Have you found a way to stretch those summer members into another month or so because you're, again, and it's avoid the fees, but have them there longer? ... That's exactly what you’re once again 100% correct. That's what's happening. They're just basically... Our strategies are basically to have the longest-term member, and we prefer not to have people drop in, drop out. It's more of a country club and a mindset. And we weren't able to do this, Simeon, when prior to 2020 because we were doing so much promotions, so we almost invited people for this behavior. And now it's finally taking hold after a couple years, you know, really, it's about two years now since we were officially allowed to run our business without any, you know, restrictions across the North America. And now we're seeing things have kind of balanced out. But the beauty of it is that we are delivering a much, much more higher-end leisure athletic country club business than we were doing in 2019, and the results are speaking for themselves. Okay, that's great. Thank you. And then just last one. You spoke to this in different ways, but just maybe understanding that some of the growth of the center OpEx expenses is tied to the ramping centers, is there any way to just help maybe simplify what you think the underlying change in existing center OpEx expenses would be if we were to strip out the new? Yeah. So look, at all times, if anybody tells you they're running everything perfectly, I would have to believe they're lying, because then I would be lying if I told you everything was running perfectly. There's always opportunities to improve. We have had a bit of a cost creep that has been already corrected, number one. Number two, there is some that is unavoidable, but it was all planned in our strategy to change our business model. So just wages alone are four or five percent higher, on the, on the wage side. And then we have more increased swipes and then hourly wages that go to service those swipes correctly are also up higher. So the clubs, we're spending no money on sales and marketing, and we are spending a lot more money teaching classes that provides the best engagement in our clubs. So, you know, I don't, you know, I don't know how else to explain this. I think the overall, we expected the cost to go up. That's why we guided to what we guided. We expected the cost to be up higher. We expected our revenues will be higher, we expected our engagement be higher, and we expected our retention to be better. So all of these things are coming right in line with our expectations. Slightly better or right in line with our expectations. Perfect. Wages are gonna- Thanks. Wages are, wages aren't gonna go back down, Simeon. Anybody sitting there thinking wages are gonna go down, I don't know what they're thinking. The wages are gonna go up, they're gonna keep going up, and in order to employ happy, happy team members who can afford to pay their bills, you got to pay them enough to have the best employees in your, in your, in your company. So that's just, that's just something everybody needs to plan for, and then you need to see if you have the ability to deliver the revenues to deliver your margins. We've been able to do that. So I'm grateful that the team has been able to execute such a great plan. Sounds great. Best of luck for the rest of the year. Thank you so much. Our next question is from Chris Woronka with Deutsche Bank. Please proceed with your question. Hey, good morning, guys, and very nice quarter. Thank you so much. Sure. The first question is really about, as far as you've talked about, you know, outperforming all your expectations and it's, you know, kind of existing clubs, new clubs. Does that change the, you know, economics of when you look at new centers, whether it's conversion or ground up? I mean, does it basically enable you to, you know, to kind of raise the underwriting budgets on stuff you look at, and maybe things fall into a bucket of penciling out better than they did a couple of quarters ago? Is there any of that to think about? Yeah. You know, everything's in line. Let me emphasize this: Our clubs are costing significantly more on, you know, on any measure. Real estate costs more, interest rates are higher, construction is significantly higher, payroll is higher, and our revenues are higher. So when we look at the business plan, which we approve, with those targeted net invested capital returns, which I told you, 30%-35%. What we consistently see when we come back three years, four years later and look at that class of clubs and see how did they perform the business plan, it's the same pattern. We have spent more, and we have delivered more, and the rate of return has remained constant. Where we are seeing right now is our new clubs opening the last year, year and a half, and now opening today-... They will have a higher revenue per sq ft. They also cost more to build, but they also have revenue, more revenue per sq ft, more margin than the old facilities because of the legacy memberships that they're inside of those memberships, in those clubs, older clubs, that will take time. You give it 5-10 years, my expectation is the legacy clubs will catch up with the new clubs. It's gonna take a long time because we've told you we're gonna raise those dues extremely methodically and slowly, so the customer remains loyal to Life Time. The beauty of that, from a modeling standpoint, is that we, again, we've been consistent about this. A 4%, 4.5% same stores for years to come is really a function of the fact that 140 clubs have the ability to keep going up to catch up with the revenues and the margins of the new clubs. So it's really all working for us. We're thrilled about what this outlook looks like for 2024, 2025, 2026, 2027. And again, I am just so thrilled with the fact that we made all the adjustments that we made, because our business model today is enduring. All those things I mentioned to you, higher interest rates, more wages and more construction costs, more supply costs. Our business model is paying for all of those and then some. So, you know, I just can't be more grateful to see where we're at right now. Yeah, thanks, Bahram. Thank you so much. Very helpful and great, great perspective. Just a follow-up, and then it kind of goes back to the, to the sale-leaseback outlook and, you know, understanding that, that there's the general view that rates maybe stay higher for longer. But we've also heard, you know, the largest player in private credit say, hey, they're not waiting for rates to come down. They're... If you're going to invest now, do you, you guys sense any change in your potential buyers and wanting to, you know, kind of, kind of move forward on, on looking at some SLBs? Yeah. So we are in under LOIs at this point on some deals, and we will announce them when it's appropriate, when we have full commitment on some deals. Ultimately, what I have said repeatedly, consistently, these deals are 25-year-- 2025-year leases with another 30 years of options, with fixed bumps in those. So the way we look at-- the way you look at our rent is based on GAAP rent. The number we give you is a GAAP rent. When you look at the GAAP rent, it's a straight lining, all of that. When you look at the difference between what the rates would have been a couple of years, two, three years ago, and what they will be now, they've reached. On a GAAP basis, they may be up 50 basis points. We are generating so much more margin at the club level that it's almost non-event. We can endure that extra 50 basis point, extra 50 on a GAAP basis, and it won't change the outcome, and the business will produce the margins that we are committing to you guys going forward. So we are in a really, really good place and looking forward to see what we can demonstrate over the next several months. Okay. Thanks, Bahram. Mm-hmm. Thank you. Our next question is from Owen Rickert with Northland Securities. Please proceed with your question. Hi, Bahram. Congrats on the great quarter. Just quickly, what's the current market value of your unencumbered facilities and assets? And how many of these could be subject to a sale leaseback if needed or desired? Yeah, this is a brilliant question. So we have, probably $3.5 billion today, market... If I took our assets and tried to sell them for replacement cost, it would be probably $3.5 billion. To be realistic, about $2.5 billion from one reason or the other, is almost punitive to make a sale leaseback. But roughly $1 billion of it, that's what we could get into some sort of the formula that would actually work. And that would be some sale leasebacks of the older clubs, which we would have substantial tax gain, with some sale leaseback of new clubs, where we keep $20 million-$25 million of our cost, right, for to build that facility as the net invested capital. But if we sell them early on before we have depreciated them, then that $20 million-$25 million can show up as a loss to offset the tax gains on the older assets. So this is a unique opportunity over the next couple of years, where we can mix old and new throughout the year on sale-leasebacks, to sort of mute out the impact of the gains or losses from a sale-leaseback, and because I really want the market to see the natural potential growth of this company. And so that also, we don't have any tax leakage, so we have some—we're still enjoying some loss carryover from the COVID period. We forecast such an increased amount of EBITDA and net income growth, that we want to make sure we protect as much of it as we can. So we want to use those loss carryovers, not for sale of older assets. We want to use that to offset and maintain our cash flow to pay for our growth. So balancing all those things, you know, to answer your question, I think, you know, out of the $3.5 billion, I think we could do, in the right environment, as much as $1 billion. I'm not telling you we're going to do $1 billion. I want to be clear. But you're asking, and I'm giving you a pure answer. We could do as much as $1 billion of it, but we have to mix and match it. And- Got it. Got it. I emphasize, we're not saying we will do that much, we won't do that much. There is no comment on that. I'm just purely answering your question, that about $2.5 billion of the $3.5 billion is almost like punitive, and the rest of it, we could find a path for it. Thank you. That was very helpful. And then secondly, in terms of the recent April club launches, are there any early performance metrics to call out, or how well have these launches gone in the first few weeks? Yeah. So far, what we have is record-breaking numbers. That's all I can tell you. We have been, you know, club after club, we've seen record-breaking numbers, and these clubs are achieving, you know, contribution margin positive, much faster than I've seen in the history of the company. So we're absolutely thrilled with what we're seeing in those results. Great. Thanks for taking my questions. Thank you so much. Thank you. Our next question is from Dan Politzer with Wells Fargo. Please proceed with your question. Hey, this is Michael Hirsch on for Dan today. Could you talk about CapEx going forward this year, and if anything has changed from last quarter's commentary? Maybe how we should think about growth versus maintenance going forward. Yeah, this is Erik. I can take that one. Now, relative to last quarter, nothing's really changed there. CapEx, especially our growth CapEx, is coming in at where we expect. For us, we're kind of looking at maintenance CapEx at, you know, roughly $10 per sq ft, and so that's kind of how we're modeling out and Yeah, and the way we're looking at that maintenance CapEx, to be clear, so you look at the last year's square footage at the end of the year, about 17 million sq ft. We applied for modeling purposes, we applied $10 a foot. That's about $170 million. Now, the way that $170 million is broken down to, I would say, it's about half and half. About half of it, $5 of it, would be what it would require to spend to maintain the, your current EBITDA, maybe plus 2% or 3%, just to sort of cover the inflation on that EBITDA. And the other half, the other $5 we spend in the clubs is for remodernization, reinvention, and technology, basically, investments, which we expect to get additional return from on top of that. So, but we—to make it easy for people to model, you could just take last year's deployed square footage, apply $10 to that. So this year would say, okay, $170 million-$175 million, and then we will take the remainder of it, if we do equivalent of 10 LFEs after net, after a sale-leaseback or all of that, net investment of, call it, $25 million apiece, is $250. You add it up, we're generating enough free cash flow from our business to actually execute that. And that's the way we're looking to go forward, be able to continue to deliver the 10 LFEs per year and free cash flow positive. Thank you. Thank you so much. Thank you. Our next question is from John Baumgartner with Mizuho Securities. Please proceed with your question. Good morning. Thanks for the question. You know, Bahram, I'd like to ask about the MIORA program. I recognize it's early days, but I'm curious as to any initial takeaways you have at this point as the program rolls out. I think, you know, bigger picture, do you see anything that would suggest an opportunity to bridge MIORA with ARORA, and maybe enhance the offerings for active adults as an incremental source of in-center revenue? I think, especially when you're talking about sleep or joint health, and maybe even the opportunity to gain some traction with the Medicare Plus or, you know, other insurers for preventative health, where it's a win-win. Just curious how broadly you think about, you know, a concierge-type service across your member base? So, first, to your first part of your question, we committed that we're not gonna try to have any numbers associated with MIORA to deliver the business model that we want, and we're working on that. We're very pleased with the demand that we see for that, and we are working on, you know, casting more doctors and physician assistants to be able to handle the traffic that is coming our way. So I would consider that business one that we will develop to a successful model and roll out. Will you see a number that would be material impact this year? The answer is no. Will it have the opportunity to start having a small impact in 2025 and then growing into 2026, 2027? Absolutely. Is there a crossover between the ARORA customer and the MIORA? Yes, but it's not the bulk of it. The bulk of the MIORA customer is the person who is gonna look for vanity. They wanna look, they wanna look great, they wanna have, you know, vibrant enthusiasm towards things they wanna do in life. And so they're looking for ways to enhance look or performance, right? And the science is going to allow people to do this, and our approach is to caution people to make sure they will only engage on those things that have been scientifically proven to be safe and effective, and not just jump on every sort of a snake oil sales pitch that is taking place. Unfortunately, with these things, when they get going and there is some good, some truth to some of these things, there is also a significant amount of hype and, you know, misuse of that information. We are always going to do the right thing by the customer, and I just don't wanna guide the financial community to trying to get numbers put into this. It's not necessary. Our growth is pretty fantastic without it, and when we roll out MIORA on a national level, it'll just add to the something that's already good. Understood. Thanks, Bahram. Thank you. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Bahram Akradi, founder and CEO, for any closing comments. Well, thank you, and thanks again for joining us this morning. We're off to a great start to what should be a milestone year for us. In an effort to share insight into our company, plans and strategy, we are excited to be hosting an Investor and Analyst Day on May 30th here in Twin Cities. We have a comprehensive agenda that will include the key milestones in our history that have led us into making us who we are today, as well as tackling many of the key investor topics that we feel are not fully understood by the investor community. Most importantly, we have a number of opportunities that we wanna talk about. For investors to hear from and interact with our deep management bench, institutional investors should reach out to our investor relations team for more information. The contact information is on the press release issued this morning, as well as our IR website. With that, have a great rest of the day. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.