Good morning, and welcome to the Life Time Group Holdings, Inc. Q2 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Ken Cooper, Investor Relations. Please go ahead. Good morning, and thank you for joining us for the second quarter 2024 Life Time Group Holdings earnings conference call. With me today are Bahram Akradi, Founder, Chairman, and CEO, and Erik Weaver, Executive Vice President, CFO. During this call, the company will make forward-looking statements which involve a number of risks and uncertainties that may cause actual results to differ materially from those forward-looking statements made today. There is a comprehensive discussion of risk factors in the company's SEC filings, which you are encouraged to review. The company will discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we've referred to as net debt leverage ratio and free cash flow. This information, along with the 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'll turn the call over to Erik. Thank you, Ken, and good morning, everyone. As always, we appreciate you being on the call with us. We are pleased to share with you our second quarter results, the full details of which can be found in the earnings release we issued this morning. For the second quarter, total revenue increased 19% to $668 million versus the prior year quarter, driven by a 20% increase in membership dues and enrollment fees and an 18% increase in in-center revenue. Access memberships increased 5% compared to last year to end the quarter at nearly 833,000 memberships. When combined with our digital on-hold memberships, total memberships ended the quarter at approximately 879,000. Average monthly dues were $198, up approximately 13% from the second quarter of last year. Revenue per access membership increased seven to $794 from $701 in the prior year period, as we continue to benefit from higher dues and increased in-center activity. Net income for the quarter was $53 million versus $17 million in the second quarter of 2023. Adjusted net income was $52 million, an increase of $14 million versus the second quarter of 2023. Diluted earnings per share was $0.26, compared to $0.08 per share in the second quarter last year. Adjusted EBITDA for the second quarter was $173.5 million, an increase of 28% versus the second quarter of 2023, and our adjusted EBITDA margin of 26.0% increased 180 basis points as compared to the second quarter of 2023. Net cash provided by operating activities increased 20% to $170 million as compared to the second quarter of 2023. As a result of our strong financial performance, we generated positive free cash flow in the second quarter. In addition, we received net sale-leaseback proceeds of approximately $143 million in the second quarter. Free cash flow was $175 million in the second quarter, compared to $21 million in the prior year period. As a reminder, we include proceeds from sale-leasebacks and the sale of land in the calculation of free cash flow. However, we are pleased to note that we delivered approximately $26 million of positive free cash flow this quarter before sale-leasebacks or land sale proceeds. We reduced our net debt to Adjusted EBITDA leverage to 3.0 x in the second quarter versus 4.3 x in the prior year period. We are extremely pleased with our continued financial performance and the expedited fashion in which we are achieving our key financial objectives. I will now turn the call over to Bahram. Thank you, Erik. On behalf of the board of directors and the entire team at Life Time, I would like to thank you for all of your contribution over the past 20 years and congratulate you on the well-deserved promotion to Chief Financial Officer. You have certainly earned it, my friend. Now to our financial results. During our Investor Day in May, we shared our strategies and priorities that have transformed Life Time into the best version we have ever seen. The numbers that Erik just shared with you demonstrate how strongly our members have embraced the Life Time brand and our dramatic evolution over the past three years. For Q2, we exceeded every one of our goals in terms of membership growth, retention, revenue, adjusted EBITDA, free cash flow, leverage, and EPS. Every single financial goal we had set for ourselves and shared with you, we exceeded. At the beginning of the year, we shared our objective of improving our net debt to adjusted EBITDA leverage ratio to 3x by year-end. We achieved this important milestone six months ahead of the schedule, and in the upcoming quarters, we will continue our path towards a leverage ratio of equal to 2.5x or less. We also shared our objective of becoming free cash flow positive by the end of the second quarter, while funding double-digit top line and bottom-line growth. Again, we accomplished this objective and expect our free cash flow to improve over the quarters ahead as adjusted EBITDA grows and our interest burden is lightened. Our next objective is to achieve a double-B credit rating in the near term. We also intend to extend the maturities of our debt in the coming quarters. We expect that the powerful combination of our revenue and Adjusted EBITDA growth, our positive cash flow, and double B rating will reduce our total interest expense, further enhancing our Free cash flow and EPS. As we stated in our earnings release this morning, we are raising our revenue guidance for the year to $2.56 billion-$2.59 billion. The midpoint of this range will deliver approximately $1.31 billion of revenue in the back half of this year, versus $1.14 billion last year, implying a 14.6% revenue growth rate for the second half of 2024. For Adjusted EBITDA, we raised our guidance to $642 million-$652 million. The midpoint of this range would deliver approximately $327.5 million of adjusted EBITDA in the back half of this year, versus $280.7 million last year, implying a 16.7% adjusted EBITDA growth rate for the second half of 2024. I want to thank the entire incredibly dedicated Life Time team members for their relentless commitment to delivering the best experiences to our members and great financial results for our investors. With that, we now are ready to take your questions. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster. Our first question will come from Alex Perry with Bank of America. You may now go ahead. Hey, thanks for taking my questions, and congrats on a really strong quarter here. I just wanted to first ask Bahram, the in-center business dollar contribution was really strong in the quarter. Can you just talk about sort of what drove the strength in the in-center business and sort of what the plans are for that? Thank you. Thanks, Alex. It's the progress we're making on executing on our stated strategies that we had before. So we still have some room to go. We still have room to improve on the progress. Some clubs, as I've mentioned before, are ahead of others, and they are really executing on the exact play, and the numbers are absolutely incredible. Some clubs are mediocre, and some clubs still have significant opportunity. And our dashboards and our systems today are basically set up to identify where the opportunities lie, and our team does an amazing job of getting together with those clubs where they still have significant opportunity and kind of troubleshoot how they can improve those. So we still have room in spa, we still have room in the cafe, we still have room in personal training, we still have room in many parts of our business to continue the progress on executing the strategies we had laid out for you guys. Thanks. Really helpful. And then my follow-up is: it looks like you raised the EBITDA guide by more than you sort of beat the street. I guess, what's driving that? Is it based on the momentum you're seeing carry into the third quarter? Thanks. Yeah, yeah, exactly, Alex. It's the momentum that we're seeing. As you notice, you know, we're new, and, you know, we're seeing a nice flow through from that. So that's just continuing to carry from Q2 into Q3 and Q4. Exactly. Perfect. Best of luck going forward. Thank you. Thank you. Our next question will come from Megan Alexander with Morgan Stanley. You may now go ahead. Hi, this is Louise Dost on for Megan Alexander. You just did a 26% EBITDA margin, and your updated guide implies something in the 25% range for the year. I think you have said in the past that 2Q is a seasonally lower quarter from a margin perspective, given the cost associated with the pool. So if that's the case, why can't you do better than a 26% in the second half? Was there anything unique about 2Q that we should be aware of as we think about the second half? Yeah. So this is Erik. I'll take that. So Q2 was, again, we saw a lot of really great things. PT, for example, we saw nice growth in PT. Stretch was a part of that. We had a very strong bistro season, so that helped us as well. And then we got some lift from the NCOs as well. But, you know, as you know, we have typical seasonality as we go into Q3 and Q4, which is, you know, typical for our business. And so, you know, 26% margin is higher than we would guide you. And as we said before, you know, we're targeting that 23.5-24.5. So it's a couple of things there, but that's those are the primary drivers. I want to add to that, to Erik's statement. It's all absolutely correct. A company needs to be thinking about the next three years, four years, five years, and beyond. We need to continue to invest in developing new programs, new ideas, new initiatives that would accelerate the future growth of the company, and we feel strong that a 24%-25% EBITDA margin is a great margin, and rather than trying to continue to squeeze that for more and start hurting the customer experience, we like to make sure we have the bullets to invest in the future of the company properly. So we do not want to guide you guys to a higher number than what we are putting in front of you. You have a choice to do what you wanna do. Okay, great. Thank you. That's all for me. Mm-hmm. Our next question will come from John Heinbockel with Guggenheim. You may now go ahead. Hey, Bahram, question: Now that you've sort of gotten the balance sheet almost where you want it and sale-leasebacks have come back, maybe talk about your efforts to reaccelerate growth, right, and get to those 10-12 openings a year. Where do we stand on that process? And I think it's probably more, unless I'm wrong, 26 that we get there, but where do we stand on that, when I think about the pipeline through whether it's the ground ups or the takeovers, how do you think about that over the next two years? A great question, John. We deliberately decelerated. We deliberately decelerated the new club expansion to achieve the very, very important milestone of becoming cash flow positive, responsible in how we spend our cash. Yet we didn't slow down at all on searching and securing growth opportunities. As a result, we have a significant pipeline where I believe over 2024, 2025, and 2026, we can deliver easily 30+ locations of a large format equivalent. So I am least worried. We had so much momentum in the benefit we would get, as we have stated before, from our strategic initiatives, and we knew we have tailwind momentum coming from all the existing clubs to deliver double-digit growth. We could balance the new club launch and but continue to build the pipeline. Our pipeline is more robust than ever, and I am absolutely confident we will deliver the type of top line and bottom line that you guys are looking for. Look, all the stuff we are doing right now is mapping out how we can accelerate the top line and bottom line growth from what we are willing to guide you to. So that's a combination of additional unit growth and all the initiatives we have in the pipeline in the final stages of rollout for the rollout in 2025 and 2026, including LT Digital, LTH, Life Time Health Products, as well as Life Time Partnerships, all of those things, as well as Miora. All of those things are additional opportunities to roll out, but our real estate pipeline is very, very robust. Great. Maybe as a follow-up to that, I mean, look, it does make sense, right, to continue to reinvest in the business. But what I... Wait, can you talk a little bit about, you mentioned a few of them, right? But the things you want to invest in, right? Because you I mean, you can leverage overhead pretty significantly. So the investment dollars are pretty, you know, are quite large. But one, what do you want to invest in, you know, kind of program-wise? And then, two, maybe for Erik, the geography of that, is that all gonna show up in center ops as opposed to GNA? Well, let's go through this. I think the most important transformation in this era is AI. If you're not gonna be ahead, you're gonna be ridiculously behind. Technology is an area that you cannot not invest appropriately. So we continue to be open-minded to see where we have to, where we must invest in terms of technology. So that's always going to eat some incremental capital, and very, very intentful at Life Time with that. First, AI needs to improve the customer experience so that the customer has easier time to transact, easier time to engage. And then secondly, you know, we need to use AI to create more additional efficiencies in the way we run everything. So that's one area that we're gonna continue to keep a very, very keen eye on. And then the second piece is just continue to invest in developing new initiatives, new accelerators of growth. Initially, those things will cost money before they can actually pay a dividend. And again, we don't wanna pigeonhole ourselves into, can we do more than 25% EBITDA margin? Sure. Do I wanna guide anybody to it? Absolutely not. Hopefully, I'm gonna turn it over to Erik. Yeah, and John, just to answer your question there, you know, as we think about those initiatives, you know, it includes digital, retail, Bahram's mentioned cafe. You know, we expect to see a lot of that come through, you know, our center performance. And so, yes, we'll invest the capital dollars, but we expect the margins of those initiatives to be accretive, not dilutive. Yeah. So initially, they take some money. You know, you just wanna make sure you have enough cushion between. The last thing we wanna do is come back and, you know, basically disappoint The Street by saying, "Well, we have to invest in such, such in order to deliver the future." We are just making sure we are measured in how much we guide you guys. Thank you. Mm-hmm. Our next question will come from Brian Nagel with Oppenheimer. You may now go ahead. Hey, guys. Good morning. Good morning, Brian. Erik, congratulations. Thank you very much, Brian. Thank you. So I'll ask two really quick questions. I'll merge them together. You know, Bahram and Erik, maybe just discuss how you just recently opened a number of new units, you know, just the performance of those centers, if you're seeing anything particularly notable as you're opening new centers. Then the second question, and I know this is a question I've asked before, but I wanted to get an update. You know, as analysts that follow consumer, we keep looking around, we see signs of incremental weakness. We're clearly not seeing that in your results today. So I guess the question I have for you, Bahram, you know, as you watch the behavior of your consumer, are you seeing anything to suggest a slower trend, anywhere? Thanks. Erik, you want- Yeah. No, I can take that. Actually, you know, quite the opposite. As I mentioned, we had a very strong bistro season, so we're seeing really good lift there. In our PT group, Stretch, Nutritionals, we're actually seeing an increase there. So as we look across our in-center business offerings, in almost all categories there, we're seeing significant growth there. So we're actually experiencing quite the opposite, and that's part of the engagement and all the things that we've been doing to continue to get members using those services. Yeah. I think there are more opportunities in improving your execution than there are headwinds from a macroeconomic. So yes, I think maybe the overall customer base for the full universe has got some challenges. But for an entity focused on particular deliverables, as long as you're delivering the customer what they're looking for, I think there's plenty of customers who are willing to pay for that. We are not seeing any weakness at all anywhere across our business. Great. And then, just to, on the new centers, anything there, anything notable there? Yeah, as my earlier comment there, new club openings are performing very well. They're at or above expectations. So we're seeing that was part of the lift I had mentioned earlier, so on track as expected. Yeah. They're actually ramping faster, generally speaking, than what we had seen in the past, you know, decade or so. And it's just a function of the fact, the repositioning of the company to the brand delivers. I mean, this is one thing that I have to emphasize: Our brand is delivering. When we announce a club going into a market, we will get a massive natural buildup of people on the waitlist wanting to join that club. That allows us to navigate much more clearly on how to price the club and everything else as we roll it out. We also are seeing the most amazing, reflection of the brand on the other side of the business, which is attracting the best talent. You know, we're just opening a club in Westlake in, Dallas. We are launching with 30 amazing, personal trainers. The demand for lifestyle for these positions are right now virtually... You know, like, we have about 20 x as many applicants as we need, you know, to fill positions. So it's really the best position we have ever been. Well, thanks for all the color. Congrats again. Thank you. Thank you. Our next question will come from Simeon Siegel with BMO Capital Markets. You may now go ahead. Thanks. Morning, everyone. Nice job. Hope you're all doing well, and congrats on the promotion, Erik. Thank you. So among the other achievements, obviously, congrats on the increased dues. You guys have been talking about that. Could you characterize how much of those increased membership dues was like to, like, increases in rate versus maybe the new members signing up at higher rates or upselling? And then maybe it was nice to hear, maybe speak a little bit more about the comment you made about the greater flow-through you're seeing on the revenue from the structural business improvements you guys have been doing. Thank you. ... Yeah, Toby, I can take the rate. So I would say it's roughly half and half. You know, we're still seeing some-- we're seeing nice benefit from the new club openings. We're also seeing some nice benefit from, as you know, we have the churn and members coming on at a higher rack rate. So, you know, if I were to split it, I would say roughly 50/50. And the second part of your question, can you say that again? What was the structural? Yeah, you guys had a line in the release about just seeing greater flow through on revenues now from structural business improvements you've affected. That's great to hear. So maybe just elaborate on that a little bit more. Yeah. So earlier, I think on one of the earlier calls, we had kind of said we saw just a little bit of cost, cost creep there. What we've done a nice job of, especially in our labor area, year over year, we've done a great job of, of, of getting that down relative to prior years. So that's obviously direct flow through to our bottom line. So we've done a real great job of just getting, labor hours, managing the summer hours, and bringing those down versus prior year. Not only in our, in our new clubs, but our mature clubs. That sounds great. Nice job, guys, and best of luck for the rest of the year. Thank you. Our next question will come from Owen Rickert with Northland Securities. You may now go ahead. Hey, Bahram. Hey, Erik. Congrats on the stellar quarter here. Just quickly, could you provide us with some more color on initiation fees? I know they were implemented at the new Harbour Island location, but are fees going to become a bigger part of the story with new club openings going forward? And then quickly, can these fees go even higher, given the extreme levels of demand for new clubs? I mean, there's 12,000 people on the wait list at Harbour Island, so how does that influence initiation fees going forward? Thank you. Thank you. Well, look, if you look at that number, it still always will be a minuscule number on a total dues revenue. So when we look at the membership revenue, I think initiation fee is 1%, 1.5%. It's just really a non-event. It's more strategic than it is numerical. So again, I can't emphasize enough, for 30 years, my team has focused on building the best brand in leisure space. I really believe they're delivering. I'm, I'm indebted to the entire Life Time team more than ever. They really are delivering on that brand experience. The brand experience is creating the demand, and then managing the experience requires you being thoughtful about how do you properly gate the flow of the customer in and out of the club. So when clubs get to a waitlist status, that's almost like the ultimate status for a lead general of our, one of our locations, to get their club to the level where they can actually go on a waitlist. That means they're delivering on the experiences to a level that the customer is appreciating that delivery. They're creating more demand than there is supply. Then managing that supply and demand becomes the opportunity. So we are more focused on applying a waitlist and a larger initiation fee to make sure we can deliver the right experience to you when you go to that club. And we're gonna see more clubs achieve that by really honing in on what they're not doing right in that experience delivery. We have all the dashboards. We guide them on, "Hey, here is where your opportunity is. You're not delivering the best experience in this part of your club, in that part of the club." And the clubs that deliver on all aspects, the cafe is doing great, the spa is doing great, the, you know, the PT is doing great, the kids program is doing great, the dues will automatically will do great. And so then you can add the... Then when you get to that level where you have more demand, you can put that in. So it's again, it's much more strategic than it is numerical, and I am really proud of our team for really embracing the strategies we launched post-COVID. You know, no salespeople. These results are with zero salesperson in the company. You know, we've told you guys this for the last three years, but maybe now the results speak for themselves. There's zero promotions, there's no advertising for the membership, and it really is all done through the hard, hard sweat of my team, embracing the idea of being the best. Got it. Got it. Thanks, and great progress, guys. Love to see it. Thank you. Our next question will come from Alex Fuhrman with Craig-Hallum Capital Group. You may now go ahead. Terrific. Thanks, guys, for taking my question. Bahram, you shared some really impressive numbers at the Analyst Day a couple of months ago about pickleball participation, and court counts. Curious, you know, have you continued to see pickleball scale over the last couple of months? And how big of an opportunity could there be to potentially build more courts? Yeah, we are on our continuous path of sort of delivering on the pickleball opportunity. We will continue methodically building locations, adding courts to get to that stated 1,000 courts in the next, you know, 18 months. And we just got our patent filed for the one, one of the problems with pickleball has been, and as a player for the last 3 years, been most frustrated with the pickleball, the ball itself. You know, the, there are balls, when you get to the higher level of play, everybody wants a faster ball, but then they have had all kinds of design flaws, where they basically are inconsistent or the ones that the people like because they're fast, they break within, like, 1 game. But they most importantly, they play super inconsistent. So as an engineer, I looked at these balls, and I started looking at why is it, why is it so flawed in the design? So we designed a new ball. We took it through the testing, took it through with our CAD folks in the company, which is basically designed it, tested it, ran with it, played with it, made two, three, and we filed the patent officially yesterday. Super excited about that. I think we have the answer, the ultimate answer to that thing. And so we're gonna continue to play in that sport. I saw the opportunity to be the first leader in a sport where I believed as soon as the first time I played. I thought, this will be the sport most participated by most people in North America. I think it's got very high, very high potential of being an Olympic sport by the next Olympics. So we're all in. We're all in. We're gonna support the sport, just like we do with everything else. We're gonna support other folks who want to play in this arena, from MLP to PPA, partnerships, everybody else, and even other ball manufacturers or pedal manufacturers. We're gonna try to help everybody. We think this is the sport that will get America off the couch into a physical activity. Beyond pickleball, what these people need to do is they need to actually work the rest of their body so they don't get pickleball injuries. So some people, unfortunately, all they do is play pickleball, and if all you do is do any one kind of sport, you're prone to injuries. So Life Time provides the full picture for them. They can play pickleball. They can also do all the supplementary things they need to do, from nutrition to exercise, you know, training to stretch. All of those things is basically available in one-stop shop for everyone. We're fully committed to pickleball, Alex. That's really good to hear. Thanks very much. Mm-hmm. Our next question will come from Logan Reich with RBC Capital Markets. You may now go ahead. Hey, good morning, everyone. Congrats on the results and congrats to Erik on moving into the CFO role more permanently. My question was just on Q1. In the prepared, you guys sort of alluded to, you know, basically the entire quarter was better than you expected on every sort of KPI. I guess I'm just trying to understand sort of what changed from relative to, you know, last quarter to this quarter, and what was so much better that drove the outperformance and, maybe just sort of expectations on those trends continuing through the year and through 2025. Okay. So look, first quarter, we executed well, and yet we left some opportunities on the table. It was abundantly clear to us that we needed to sort of focus our team. Our... The way we run our company today is our lead general; we call them lead general rather than general manager, because everybody at Life Time leads, nobody manages. All the department has lead. They actually do the work in the front line to demonstrate and to be in the loop. So our lead generals run their clubs with quite a bit of autonomy. We have provided the most amazing revolutionary dashboards for them and support system from the corporate, so we can break down their business for them, show them their opportunities, and then show them where they are basically maybe missing the opportunities, and, and then coach them and help them to kind of get better execution. We were able to see this execution more like a symphony. Our President of Club Operations, Parham, and our RVPs, and our area directors, as well as our lead generals, they absolutely embraced the fact that they had the opportunity to look and not have waste. I am very, very forceful that the experiences cannot be compromised as you basically looking for efficiencies, but you also don't want to waste. So they were able to respond. They literally responded within four weeks. I'm going to turn it over to Erik. too, because as a controller, as a CFO, as the guy who runs all the numbers and everything goes through him, he can tell you what he's seeing. The company's ability to react today versus 3-4 years ago. Erik? Yeah, and that was part of my comment earlier that, that I had made. You know, in the first quarter, we had kind of said, you know, a little bit of that, labor cost creep. Again, we've addressed that, and we saw very nice progression on that year-over-year in Q2, which, of course, falls to the bottom line. As we mentioned, you know, we've gotten more dues flow through. Another thing that we're continuing to see is very, very good retention, better than we had planned, better than we had expected. So you've got better retention, you've got some churn from members, we've got some really great progress that ops is making on the labor side. And then, of course, as we mentioned earlier on the in-center businesses, if you look across PT, cafe, kids, and aquatics, those are all up year-over-year. And again, that's indicating strong consumer demand for all of our products and services. So it's kind of it's all of those things. It's that symphony that Bahram mentioned. Got it. Super helpful. And then just one quick follow-up, if I could. I think you sort of alluded to, you know, maybe some gap in some center performance. I guess, like, if the centers that are, you know, maybe sort of lagging the higher-end centers, if those sort of got to, you know, maybe where the average is, or if you guys sort of improved those just on the blocking and tackling that you guys need to do, is there any sort of, I guess, like, upside to the 25% margins? Like, I would assume those stores have lower margins, and, like, would you reinvest those additional dollars? Or, you know, do you think you could get to above 25% margins while still being able to adequately invest for future growth? All right, so I'm gonna answer this a little differently to you. How many companies are delivering 25% EBITDA margin? I am adamant that we are not going to get pigeonholed into pushing, pushing, pushing until, like most businesses, you basically start deteriorating your business. We're not gonna guide you to a higher margin than that. Does it mean we can't deliver more than that once in a while? Yes, we probably can. Do I want you guys to go put those numbers in? Definitely, I don't, but you can do what you want. We wanna be able to deliver time and time again to you guys. When we give you a guidance, we wanna make sure we have a very, very high certainty of delivering that number. So we're not gonna put our neck on the line. We're not gonna tell you go to 26% because we did it in one quarter. Let's just, let's just enjoy the 25%, for some time. If we can deliver more, we will deliver more. Got it. I appreciate the color. Congrats again. Thank you. Our next question will come from Michael Hirsch with Wells Fargo. You may now go ahead. Hi there, and congrats on the quarter, and congratulations to you, Erik. Thank you. Given your recent pricing increases, could you talk about the competitive environment at this time? And also, how does Life Time react when competitors waive enrollment fees or discount? I'm gonna answer your second question first and then go through. We really are focused on our execution, not concerned about others at all. You know, the industry spends generally 5 or 6% of their revenue in marketing on average. We're at 1.4% or less in the future. We just really don't focus on that. We focus on being one of the highest-end leisure companies, expanding the breadth of our offering to all aspects of lifestyle. And we don't really focus on what others are doing or not doing, and I think that, for the most part, should answer your question. We, we are not concerned about any particular group or party. I have repeatedly stated, if I personally left Life Time and I took top 100%, the top 100 of my team members with me, there is no way for us to replicate anything that could put a dent into Life Time in the next decade or more. It's just the scale of having 175 and adding 10, 12 more per year of these type of facilities, our technology, our brand, 130+ billion impressions a year. We are focused on what we can do better. There are still tons of opportunities in inventing new programs and really focused on our customer rather than focused on our competitor. Does that answer your question? Yes, thank you. As a quick follow-up, could you talk about the sale-leaseback environment now and how we should think about sale-leasebacks and your cash flow profile into 2025? That's great. So we have another $65-$66 million that we expect will get done here in 3Q. And then we really haven't been pursuing anything else. I am pretty confident that we will see a much better rate environment for all those people in the sale-leaseback market. They'll be able to get access to a better cost of capital, and that will translate directly to us. I also emphasized in my call, our next biggest goal is to establish this company, A, which I think we're almost there, as a mid-cap and growing. We could cross the $4.5 billion market cap, get to $5 billion, get beyond that, and most importantly, get to a double-B credit. With a double-B credit, the interest environment, you know, on the way down, I think the sale-leaseback market will become way more robust, and we can secure lower cost of capital on the debt side and on the sale-leaseback, both the same. So I think the 25 looks incredibly more robust. We have full intention of playing our strategy as an asset-light company. We basically intend to recycle our owned real estate assets to basically, at the right time, at the right cap rate, to fund the more accelerated growth in the next several years, okay? So sale-leaseback is the part of the strategy. It's just the timing of the sale-leaseback. We did as much as I think was prudent to do this year to achieve the 3x debt to EBITDA. The other nice thing, as we mentioned, and you guys have noticed, is that the incremental rent we knew is, it's non-event relative to our overperformance of EBITDA. So ultimately, this, you know, this proceeds coming from sale-leaseback are largely to just lower the debt to EBITDA substantially. Again, our goal is to get to 2.5 x sooner than later, hopefully in the next 6 months or more, or so. And then that puts us in exactly where we want to be, free cash flow positive, 2.5 x or less debt to EBITDA, you know, $4.5-$5 billion market cap and growing. So basically, all of those things stack up in Life Time's favor to have the best sale-leaseback rates going forward. Does that answer your question? Yes, thank you. Our next question will come from Chris Woronka with Deutsche Bank. You may now go ahead. Hey, good morning, guys. Thanks for taking the question. So Bahram, a lot of good stuff going on, a lot of positive trends, and you've got a, you know, pretty clearly articulated growth plan with a lot of legs to the stool. So the question is kind of how do you juggle all this? And do you have, you know, kind of the bandwidth internally to, you know, to kind of as these things grow? Because you, you've talked in the past, you know, including at Analyst Day, about, you know, we keeping up double digits, top line, bottom line growth. You know, do you have the bandwidth at the, you know, I think really at the corporate level, but maybe a little bit down at the center level, too. Thanks. Great question. The answer is absolutely. Our – I have never been more impressed with the Life Time team members. I am fully and entirely indebted to everyone from the front line to my direct reports. The best, the best alignment, the best teamwork I've ever seen in 30-some years. Everybody is acting as one, nobody's self-centered, and we can, we can still deliver significantly more on other initiatives that we are adding on. So I, I have zero concern about us, and I love what I do. I don't like it, I love it, and I am never... You know, for all of those guys who work with me from your banks, they know I'm always on, you know, and so is the rest of my team. And we are, there isn't a team member that I will give a call on a Saturday afternoon, Sunday night, that I don't get a, you know, either to pick up the phone or answer, you know, or—but it's not just me, it's that's the way we all work together. Everybody's on, everybody's working as a team. It's never been better, my friend. Okay, good to hear. Thanks, Rob. Mm-hmm. Our next question will come from John Baumgartner with Mizuho Securities. You may now go ahead. Good morning. Thanks for the question. You know, first off, Bahram, I guess, I'm curious how you're thinking about member engagement and I guess specifically utilization. That, that's been increasingly pretty strongly, coincidentally, with the investments you've made in programming the last couple of years. But how do you see utilization evolving from here? Is there sort of a, like a historical high watermark for member utilization and engagement that you haven't yet recovered back to at this point? Is there a ceiling for engagement where you sort of cap out where the incremental ROI on programming moderates at some point? Just curious how you're thinking about utilization from here and how that governs your decisions for incremental programming investments. It's a great question, and it's the core of all programming. So basically, the connectivity to the members, understanding your member, knowing what incremental opportunities they have to maximize the benefit from their membership, guiding them. I know we are in the final weeks of launching Lacey, that's the Life Time AI companion, to all of our members. We've been in beta mode with that for quite some time. And again, the goal there is to help the customers find the best opportunities to engage, have social opportunities for them to come to all the amazing events we have in group fitness, amazing events we have on the beach clubs. It's just a constant imagination and reimagination of how we can deliver more incredible experiences to the customer. You know, again, you know, we're a little, little frustrated when people just use the term gym, because these places, as you guys know, it's like, it's everything to our members. It's their social place, it's their beach club, it's their programs, it's their network. Yes, they get a workout, but it's all of those things, and we are constantly working on how to improve those things from a member point of view. And as long as we continue to enhance the member point of view experiences, it, the engagement should increase, and the more engagement they have results in more demand for the clubs, more waitlists, which is good for us. It also creates better retention, which is basically makes the churn go down, down, down. So we're fully engaged on it. I wouldn't say we are in any position to say, "This is it. We're never gonna get better than this." But the numbers we have today are incredibly great, so they don't need to improve, but we like to, we like to see what we can do to make them go better. But this is amazing engagement I've ever seen in 40 years in this industry. Excellent. And a follow-up for Erik on the operating leverage and, and specifically the overheads in the general and administrative line. The progress there has been pretty consistent for the past two years or so. And I'm curious how much efficiency you can still get on that G&A line going forward, with all the moving parts around programming and, you know, leveraging what you've had in the last couple of years with sort of the, you know, the outlet build-outs. Yeah, it's a good question. You know, we've seen, we've seen leverage, we've seen great leverage. I think, you know, we'll continue to see some leverage as, you know, we continue to grow. We will, you know, make some investments as we need to, but, but I would expect that we'll continue to see that lever down a little bit as we continue. Okay. Thanks for your time. Okay. This concludes our question and answer session. I'd like to turn the call back over to Bahram Akradi for any closing remarks. All right. I just have one quick comment before I leave the call. I want to make sure the credit goes to where the credit is due. That's definitely not me. It's the entire Life Time team. I am most, most appreciative and impressed by the Life Time's passionate, incredible team for executing on this vision with so much love and passion. So thanks to all of my team. Thank you, all of-- Thanks, all of you guys.