Good morning and welcome to the Planet Fitness Q4 2023 earnings conference call. Please note that today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one a second time. I will now turn the call over to Stacey Caravella, VP Investor Relations. You may begin your conference. Thank you, operator, and good morning, everyone. Speaking on today's call will be Interim Planet Fitness Chief Executive Officer Craig Benson and Chief Financial Officer Tom Fitzgerald. Both will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. Before I turn the call over to Craig, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during this call. Our release can be found on our investor website along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Now I will turn the call over to Craig. Thank you, Stacey, and thank you, everyone, for joining us for the Planet Fitness Q4 earnings call. Before I review our fourth-quarter results, I want to take a moment to discuss the announcement we made today that Tom Fitzgerald, our CFO, has decided to retire at the end of August 2024. Since joining Planet Fitness four years ago, Tom has been a tremendous asset to our team, bringing 40 years of corporate finance and executive leadership experience to the business. Now I'm going to turn it over to Tom to discuss his decision. Thanks, Craig. It's been a privilege to serve as CFO of Planet Fitness and work alongside such a dedicated and passionate team. I really can't think of a better way to end my career than working for a brand that does so well and also does so much good. After 40 years in business, I've made the decision to retire at the end of August 2024 and focus on some of my interests outside of work. I look forward to handing over the reins to new leadership that will guide Planet Fitness's next chapter. I am proud of the work we have done during my time at Planet Fitness to deliver value to our franchisees and our shareholders. I know that we have a lot more work to do, and over the next several months, I will be focused, as I always have, on our key strategic and financial objectives and on ensuring a smooth transition to new leadership. So with that, I'll turn the call back to Craig. Thank you, Tom. Just two months into his role, the pandemic hit, and all gyms closed temporarily, which presented an unexpected and once-in-a-lifetime challenge for a newly appointed CFO. Tom embraced this challenge head-on with steadfast leadership. He dove in immediately and spent a considerable amount of time speaking with bankers, lenders, investors, and franchisees, reassuring them that our strong balance sheet would get us through the depths of the crisis even when all our gyms closed temporarily. He ultimately expanded our capital allocation strategy to include the acquisition of one of our largest and best-performing franchisees, which doubled our corporate store footprint overnight. During his time at Planet Fitness, Tom has also helped build a talented financial team that will ensure a smooth transition to the next chapter of the company's financial leadership. He's also been a great partner to me in my role as Interim CEO. On behalf of everybody at Planet Fitness, I would like to thank Tom for his many contributions to our company. And now let me turn to the CEO search. The CEO search remains a top priority for the board and the search committee. After considering several dozen candidates and having interviewed 13 very qualified finalists, the search committee will be sending a short list to meet with the whole board. We look forward to updating you when a final decision has been made. We expect to announce a new CEO prior to identifying our next CFO. Tom's commitment to remain through the summer will provide an extended transition period, allowing the new CEO to be involved in the CFO search process. Now to the results. We ended 2023 with 18.7 million members, system-wide same-store sales growth of 8.7%, primarily driven by new member growth, and a 19% adjusted EBITDA growth. Our system opened 165 new Planet Fitness locations globally in keeping with our mission to make fitness accessible in a clean, safe, and welcoming environment for anyone who walks through our doors. On an annual basis, we experienced an improved cancel rate, and we continue to see overall higher visits per member, as well as all age groups visiting more frequently year-over-year. We saw significant increases in penetration levels across all generational groups since the end of 2022. Gen Z now makes up more than 25% of our members, and they continue to lead the way in terms of membership growth. This was driven in large part by our successful High School Summer Pass program. In its third year and second consecutive summer, we had more than three million teen participants, and our conversion rate to paying customers was above the 2022 level. We aim to be the brand that Gen Z think of when they're ready to join a gym, and this program further strengthens our appeal. Our business is unique in the retail sector, as a gym membership isn't a frequently purchased item. With 40% of our new joins being first-time gym-goers, we need to ensure that we are achieving the correct balance of messaging and pricing. We are exploring whether we have an opportunity to take price on our Classic Card. Last fall, we started testing two price points, a $15 and a $12.99, for the Classic Card in about 100 stores each. Both go back to $10 during the national sale periods, and the advertising communicates a call to action to join before the sale expires. We added an additional test in December to include the New York DMA, where we are keeping the price at $14.99 regardless of national sale. As we are a recurring revenue model, we plan to continue to run these tests at least through the first quarter to fully understand the impact that increasing price has on average units volumes by evaluating the impact of the rate of joins, cancels, and change in Black Card member mix. We're actively navigating today's economic environment and taking a disciplined, data-driven approach to determine the optimal outcome for us and our customers. We look forward to sharing more on these results of the test. Now to 2024 and beyond. Our significant size and scale advantage has enabled us to deliver consistent, reliable growth for more than 30 years, and we're focusing on expanding our lead against our high-value, low-priced competitors even further. To do this, we're adapting to the post-pandemic macroeconomic environment with the development of our New Growth Model, which we announced to our franchisees in the fourth quarter. As a reminder, our plan is focused on enhancing our already strong new-store economics and reducing capital requirements for opening and operating a Planet Fitness franchise location. This includes making changes to the franchise agreement, adjusting the timing for cardio and strength re-equips based on usage, and committing to reducing CapEx for new builds and remodels while also looking for ways to reduce operating expenses. We believe the new model balances improving store returns without significantly impacting our P&L. It's a win for the franchisees and for us as the franchisor. By the end of 2023, all but two franchisees, both of whom are single-store owners, have opted into the plan. We are now in the planning and executing phase. We believe the change we made to the model will free up a significant amount of capital for our franchisees, providing them with additional flexibility to build their store portfolios for years to come. We expect 2024 to be a transition year because it will take time to see the results in our new-store pipeline, as the average time to build a new location from site approval to opening was between 12 and 14 months last year, up from six to nine months pre-pandemic. We're already rolling out our tests to change design elements in our store as part of our commitment to decrease the cost to build a gym without compromising the member experience. For example, we're testing the reimagined lobby and workout areas, and we're also encouraging franchisees to work directly to source more of the materials for the build themselves instead of relying on general contractors who charge a markup on those materials. Finally, I'd like to share some very encouraging results from the third-party studies we conducted on our long-term domestic store opportunity. Based on the results, we now believe we can have 5,000 gyms in the U.S., up from 4,000 at the time of our initial public offering in 2015. And this doesn't even contemplate several other factors that could potentially increase the number, including: first, a smaller store footprint, which could enable us to infill suburban areas as well as enter geographies that don't meet our standard population requirements; and second, our historic ability to continue to achieve even greater penetration in each successive age generation. This is only the domestic opportunity. We're excited to announce that we're entering Spain and expected to open a store by the end of the year. Only 10% of the population currently has a gym membership, and we believe we have a meaningful opportunity to expand our brand outside the U.S. and can democratize fitness in a non-intimidating environment, as is evidenced by our recent development progress in Mexico and Australia. Finally, we recently took actions to reduce the size of our headquarters workforce and realigned our resources towards key growth initiatives to better position us to succeed in 2024 and into the future. At this time, we will not be reissuing a three-year outlook given several factors, including: first, continued macroeconomic uncertainty. Second, our franchisees are still incorporating the changes from the New Growth Model into their long-term plans. And last, we'd like for our permanent CEO to have the opportunity to weigh in on our targets. We have very promising opportunities on the horizon. As we continue our pricing tests and execute our New Growth Model, we're capitalizing on our strong momentum along with our proactive, forward-thinking mindset to drive enhanced value for shareholders. Now I'll turn it back over to Tom. Thanks, Craig. We believe that we are operating from a position of solid financial and balance sheet strength as we continue to break down fitness barriers for first-timers and casual gym-goers. Today, I'm going to address 4 things. First, our entry into Spain. Second, potential plans to refinance a tranche of our debt in 2024. Third, our Q4 results. And lastly, our 2024 outlook. Starting with Spain, we believe we have an opportunity to build on the success we've had internationally to expand into Europe. Spain is an attractive market in which we believe we could have more than 300 Planet Fitness locations over time. In order to accelerate our presence, we plan to open and operate a small initial set of corporate-owned stores in the near term and expect to eventually refranchise them. This is an example of us using our balance sheet to drive growth at a faster pace in exciting new markets as we continue to position Planet Fitness for sustained growth and value creation. Importantly, we continue to believe in our asset-light, highly franchised model, and we reiterate our strategic intent to own approximately 10% of our fleet. Now to our debt. We have an approximately $600 million tranche of debt that comes due in September of 2025, which we anticipate refinancing in the middle of this year subject to overall market conditions. Based on indicative pricing, we believe our weighted average interest rate would still be below 5% when we refinanced that tranche. Next, I'll cover our fourth quarter results. All of my comments regarding our quarter performance will be comparing Q4 2023 to Q4 of last year unless otherwise noted. We opened 77 new stores compared to 58. We delivered same-store sales growth of 7.7% in the fourth quarter. Franchisee same-store sales grew 7.6%, and corporate same-store sales increased 8.7%. Nearly 80% of our Q4 comp increase was driven by net member growth, with the balance being rate growth. Black Card penetration was 61.9%, a decrease of 60 basis points. The decrease primarily reflects the continued increase in our Gen Z membership growth. For the fourth quarter, total revenue was $285 million compared to $281 million. The increase was driven by revenue growth across our franchise and corporate-owned segments. The 13% increase in franchise segment revenue was primarily due to increases in royalties, web join fees, and the National Ad Fund revenue. The royalty increase was primarily driven by same-store sales growth, royalties on annual fees, and new stores. For the fourth quarter, the average royalty rate was 6.6%, up from 6.5%. The 15.9% increase in revenue in the corporate-owned store segment was primarily driven by same-store sales growth as well as new and acquired stores. Equipment segment revenue decreased 25.5%. The decrease was primarily driven by higher re-equipment sales in Q4 2022, which were unseasonably high due to the supply chain issues that pushed equipment deliveries from the second quarter to later in the year. We completed 67 new store placements this quarter compared to 66 last year. For the quarter, replacement equipment accounted for 43% of total equipment revenue. Our cost of revenue, which primarily relates to the cost of equipment sales to franchisee-owned stores, amounted to $57.5 million compared to $73.8 million. Store operation expenses, which relate to our corporate-owned store segment, increased to $65.6 million from $57.6 million. SG&A for the quarter was $31.2 million compared to $28.7 million. Adjusted SG&A was $29.5 million. This includes a $1.2 million adjustment for CEO transition-related expenses. National Advertising Fund expense was $17.6 million compared to $15.7 million. Net income was $36.8 million. Adjusted net income was $53.1 million, and adjusted net income per diluted share was $0.60. Adjusted EBITDA was $114.3 million, and adjusted EBITDA margin was 40.1% compared to $106.1 million and adjusted EBITDA margin of 37.7%. By segment, franchise adjusted EBITDA was $68.1 million, and adjusted EBITDA margin was 69.2%. Corporate store adjusted EBITDA was $45.6 million, and adjusted EBITDA margin was 39.1%. Equipment adjusted EBITDA was $16.8 million, and adjusted EBITDA margin was 23.8%. Now turning to the balance sheet. As of December 31, 2023, we had total cash, cash equivalents, and marketable securities of $447.9 million compared to $472.5 million of cash and cash equivalents on December 31, 2022, which included $46.3 million and $62.7 million of restricted cash, respectively, in each period. In 2023, we used $125 million to repurchase approximately 1.7 million shares. Total long-term debt, excluding deferred financing costs, was $2 billion as of December 31, 2023, consisting of our four tranches of fixed-rate securitized debt that carries a blended interest rate of approximately 4%. Finally, moving on to our 2024 outlook, which we provided in our press release this morning. As Craig noted, we believe 2024 is a transition year for new store development as our system absorbs the New Growth Model. We expect between 140 and 150 new stores, which includes both franchise and corporate locations. We recognize that modeling our equipment segment business can be difficult, so we're going to provide more insight on it today. Let me address placements first. We expect between 120 and 130 equipment placements in new franchise stores, which, on a percent basis, we expect will play out similar to last year across the quarters. For the full year, we expect that re-equipped sales will make up approximately high 60% of total equipment segment revenue. We expect that this year will look more similar to 2023 in terms of the quarterly cadence for those sales as it is a more typical year versus the prior three that were impacted by COVID. Now, as a reminder, the shift to more strength equipment versus cardio will bring down overall sales on a per-store basis, but we are committed to maintaining our profit dollars, so therefore our margin rate will increase. We do not expect the re-equip extensions as part of the growth model to impact our P&L until 2026. We expect system-wide same-store sales growth to be between 5% and 6%. Now, all of the following targets reflect growth over fiscal year 2023 results. We expect our full-year revenue to grow in the 6%-7% range. We expect that our full-year Adjusted EBITDA will grow in the 10%-11% range. We expect adjusted net income to increase in the 9%-10% range, and we expect adjusted earnings per share to grow in the 10%-11% range. We also expect shares outstanding to be approximately 88 million, which is inclusive of the repurchase of 1 million shares over the course of the year, the minimum amount we committed to back at our investor day in November of 2022. We expect our net interest expense to be approximately $70 million, which assumes we refinance the tranche I mentioned earlier at 6.5%. We will update our net interest expense guidance pending the completion of the anticipated refinancing transaction in 2024. Lastly, we expect CapEx to be up approximately 25% with the increase driven by our entry into Spain and remodels and relocations for our U.S. corporate stores. We expect D&A to be up between 11% and 12% driven by the increase in CapEx. As Craig mentioned earlier, we are not updating our three-year outlook today. In the meantime, our teams are working with franchisees on their development, remodel, and re-equip plans as they determine their near and long-term capital requirements and future growth plans. We believe that the changes we recently made will further improve returns for all of our stakeholders as we enhance our model to deliver long-term, sustainable value for many years to come. I'll now turn the call back to the operator to open it up for Q&A. At this time, I would like to remind everyone, in order to ask a question, please press star 1. Your first question comes from Simeon Siegel with BMO Capital Markets. Please go ahead. Thanks. Hey, everyone. Good morning. Tom, best of luck on the next chapter. It's been really great getting to know you, work with you. Wish you the best ahead. Thank you, Simeon. Likewise. All right. Could you guys elaborate a bit more on the lift to 5,000 from 4,000? Maybe speak to the just those incremental 1,000, what are they? Are they any different than the priors? Is there a geographic difference? Does anything change with economics, growth waterfall, expected members per gym, etc.? So any help there would be helpful. And then just given the many moving pieces at corporate, any help on FY24 on next year's SG&A dollars? Thank you. Yeah. Thanks, Simeon. I'll take both, and Craig may add. So on the study that we did, as you'll recall, we went back and used the firm that originally gave us the projections pre-IPO. That was Buxton, and the current firm we use, Tango. And I think they both said to us, using different words, that they really love the project because we, in their words, almost have perfect information, right? Unlike a restaurant or a retailer who doesn't really know where their customers live, we know where every single member lives and how far they drive, etc. So it's data unlike what they typically deal with. So they feel really good about the results. Having said that, they're based on where the demographics are today. And so the 4,000-5,000 is basically the prototypical Planet Fitness that's 20,000 sq ft urban, suburban locations. It does not include small market infill or anything like that. So it's literally just penetrating the markets we are in based on what's happened since the IPO in terms of our own membership growth, the generational cohort trends that we've seen where the younger generations are joining at a more rapid rate, and we're 9% penetrated with millennials and Gen Zs. Geographically, the store opportunities are sort of based almost mirror how we rolled the brand out across the country. So starting in the northeast, we have much more density in terms of percent of population that belongs to Planet. It gradually lessens as you go to the southeast and even lower in the southwest, middle of the country, and lowest in the west where we went last. So the store count increases are reflective of that, essentially. So we think it's really good news, not unexpected, frankly. Because it's a point in time, we think when we remeasure it, when the company remeasures it in a few years again, assuming the generational trends are continuing to move as they have been projected, it should be another positive story. We're really encouraged by it. The second part of your question is SG&A. It's reflected in our outlook. More broadly speaking, it incorporates all the actions we took here earlier and the priorities we're focusing on. Great. Thanks a lot, guys. Best of luck for the year. Thank you, Simeon. Your next question comes from Megan Alexander with Morgan Stanley. Please go ahead. Hi. Good morning. Thanks. One quick clarification, Tom. I think you said you expect system-wide same-store sales between 5 and 6. The press release said high singles. So I just wanted to clarify that point first. Oh, yes. It should be five to six. Got it. Okay. Thank you. And then. My apologies for that. No worries. Maybe in light of that, there's been a lot of data pointing to maybe some softer trends quarter to date. A lot of others have commented on some weather noise in January. Could you maybe comment at all on quarter to date membership trends versus your expectations and perhaps how the cadence has played out so far January to February? Yeah. Hey, Megan. I'll take that one again. In keeping with what we've been doing here for the past several quarters, we're not going to comment on the current quarter. We'll certainly provide a lot of in-depth discussion on our next call. But what I would say is that our outlook includes what we're seeing to date and our best knowledge of how we see that growth unfolding over the rest of the year. So I get it's a big question. There's a lot of media attention to it. We just want to continue our practice of not commenting on the current quarter, but it is reflected in our outlook. Okay. Understood. And then maybe as a follow-up, the placement outlook, 120-130, it is a bit below last year. Understand the changes you're making to the model aren't necessarily impacting development yet. But I was hoping maybe you could just talk through some of the other puts and takes that's driving the expectation for it to be lower than last year. And maybe in particular, how much the transition to the new cure period is impacting your outlook there? This is Craig. Good morning. We certainly are vigilant about what we're looking at with franchisee new store development, as well as all the different elements of remodeling and re-equipping. We've taken a fairly conservative outlook on where we go from this because it's taken quite a long time for the system to absorb the changes and what it means to their CapEx budgets and needs and the interest rate charges on top of or changes on top that have also added to the mix. We're pretty confident that our franchisees are very aggressive and want to, as I've said before, want to grab as many good locations as is possible. Part of the challenge is also finding locations as we're in an all-time low for retail space. About 98% of retail space is accounted for, meaning it's being used. So that doesn't leave a lot of space left over to grab either. So that's a phenomenon that I guess has been going on for some time now, clearly COVID and beyond, but even perhaps before that, so that somebody who takes down as much retail space as we do has a bit harder time finding those locations that used to be more available. Great. Thank you very much. Best of luck. Thanks, Megan. Your next question comes from John Heinbockel with Guggenheim. Please go ahead. So, guys, I want to start with, do you think, given Gen Z and High School Passes, as demographics change over time, does the business become a little less seasonal, right? January less important, 1Q less important. And how does that kind of fit in with thoughts on promotional activity, right? The idea that maybe you can go every day low price and not lean on $10 so much. What's your thought on that? Hey, John. It's Tom. I'll start that one. I think it's, frankly, too soon to tell whether or not the shift in our membership mix to be more Gen Z and millennials, which are a little over 60% of our total membership base now, whether that causes a change in the seasonality of the business and the membership growth or our promotional strategy. Certainly, we haven't seen anything that would suggest that through 2023. Again, we're not commenting on 2024 yet. And I think time will tell. But what we've seen, and maybe you heard anecdotally, is the idea of New Year's resolutions and starting the new year with some new goals is not necessarily generationally based. It seems more universal. But again, I think time will tell. Yeah. I think that the other thing that we have to understand is that we are fortunate our membership continues to decrease in age, not increase in age. You mentioned there's patterns to that. The last thing I'll mention, because we've talked about it before, especially ICR, we have to do a better job branding this company than we have done in the past. That will mean that some shift away from some of the promotional collateral we've had in the past and more towards a branding message. You haven't seen that yet, and we're still developing that. But that'll come over time. I've also mentioned that younger people tend to want to align themselves with brands they can relate to. So by offering a branding message, hopefully, we can get people to become more fans of Planet Fitness, stay longer at Planet Fitness, and other things that can be attributed to having a strong brand, which we have, but we have not enunciated. Craig, since you hit on that, maybe a follow-up. When do you think we start to see that content, right? I don't know that you necessarily want to wait until peak season next year. Because when do we see that? Where would you like to see the split on national, local, right? Which today, I guess, is two and seven. Then is the plan still starting in April to relax the spending requirements, right, for the first two years on new clubs? Yes. The answer to that question is yes, John. So that is out there. We are developing that content, and we're in the early innings of that. And to be honest with you, I don't know where it's going to land timewise, but we need to get it done as quickly as possible and hopefully have it so that when we start next year, we have branded content going on with promotional content. So that's sort of the plan. And we need to execute on that, as you know, because you follow this company very closely. This company has a lot of good things that we do for people that we just don't talk about. And we need to be much better articulating that message in a clear and concise way. And doing that in conjunction with promotional pricing, I think, will be a real winning combination. Okay. Thank you. Thanks, John. Your next question comes from Jonathan Komp with Baird. Please go ahead. Yeah. Hi. Good morning. Thank you. I just want to follow up. You gave the comps guidance for the year, 5%-6% growth for the system. Can you just talk a little bit more? I know the typical target is high single digits. So what are you seeing or embedding in the expectations for comps below your typical plan for the year? And could you just talk more tactically? Given some of the signs of a softer start for the industry, do you have some specific plans or reactions in place to drive better performance going forward? Yeah. Hey, John. It's Tom. So I think if you look at how our comps played out over 2023, they were still strong, but the fourth quarter was the lowest of the four and sort of played out that way in the Q2 and Q3. So I think, as you know, with our business, more and more stores are now mature, still growing. We talk about our original store in Dover here in New Hampshire still has positive same-store sales growth, mostly due to member growth. But the mature stores do grow slower. And the impact of ramping stores in their first, second, and third year has always been a big help to same-store sales. And that just from a composition of our fleet is just becoming a smaller percentage. Now, as we've said, those new stores that we're building here in late 2023 and—sorry, late 2022 and into 2023 have really tightened the gap to where those new store ramps were pre-COVID. So that's really great to see. They're not all the way back there, but they're definitely very close. So that's a good part. It's just really the composition and the mix of new and ramping clubs compared to the mature store base. But in the grand scheme, we still feel very good about 5%-6%. And you know the flow-through of the model. Franchisees will still and our own corporate clubs should still have expanding EBITDA margins on a four-wall basis with those same-store sales. Any thoughts on just tactically plans for 2024 here, things you could do to drive member gains throughout the year? Well, I think, again, we're not talking about 2024 in particular. But generally, we always assess what's happening with each passing month and working with our franchisees to coordinate our activity and what we think we need to maintain or tweak. The good news is we spend a lot of money. So we definitely try to be as agile as possible in redirecting, whether that's channel shift or calendar shifts, channel meaning digital to broadcast. To Craig's point about messaging, I think we'll learn more through the year about how we mix the messaging. So we still believe we spend almost the entirety of the marketing spend in the industry in the U.S. So we've got a lot of firepower. We just will continue to try to optimize that as we progress across the year, just like we do in any year. Okay. Thanks, Tom. And then just one follow-up. Craig, if I could just ask, you've been in the interim role now for five months here. Just could you give any more specific details on the timeline here for the remaining process, maybe what stage you're in with some of the interviews and any characteristics of some of the candidates you've identified? Thanks again. Thank you for the question. The committee has interviewed several dozen candidates from a pool of over 100, I believe, and are now creating a shortlist that we should see somewhat shortly. So I'm looking forward to seeing that shortlist and then perhaps talking to those people that fill our needs and assessing where we go from there. But I think the process is starting to wind down and come to some completion. Okay. Thanks again. Yeah. Thanks, John. Your next question comes from Max Rakhlenko with TD Cowen. Please go ahead. Great. Thanks a lot. So can you share any takeaways thus far from the pricing pilots that you've got going on, just the impact that they've had on membership growth and elasticity, sort of what this churn looked like there as well as the Black Card mix? Are the outcomes similar across the various pilots, or are you seeing variability there? So I'll take the first portion of the question. So we have three tests going, as you probably know, a $15 and a $12.99, which both started in the August-September timeframe. We added to that a $14.99, which started in the December timeframe. That was in the New York DMA. Both of the other tests, the earlier tests, were a combination of DMAs of roughly 100 clubs that were doing it and 100 clubs that we model against those doing it. So we have a test group, too. The results vary over time. And as you know, we also, in those two beginning tests, allowed the clubs to when we're on sale for the Classic Card at $10, they would follow that Classic Card pricing. That was not the case with the New York DMA, the later test, the $14.99. They did not offer that $10 membership opportunity since that started in mid-December. So they have not followed the national sale model for that particular $10 offer. We're still assessing where it is. Again, the biggest portion of this is how many people you can sign up. But just behind that is how long do they stay. And that's an iterative process that takes a while to understand. I will say that I think, and there's no data behind this, that it takes a while for the market to absorb pricing changes. And so there could be some anomalies associated with that. I need to look further at the data to understand that better, if there is anything to it at all. But just bringing that up as a conversation piece. So Tom, do you have anything else? No. Yeah. Just one thing, Max. I think, understandably, there's been a lot of media things written and said about our pricing test and what we did. And most of it is actually inaccurate. And I think the principal statement we want to clarify is some folks have said that we were doing something in the first two weeks of January, and then we changed our price because of soft trends and all that. That just wasn't the case. It's a question of what media people see. So if they're watching the national ads, they're not seeing a price point in those ads for the reasons we've articulated. But then if they saw a local ad, all the local media does carry a price point. So it's just a question of what you saw when. But we did not change any messaging tactics or pricing through January as a result of anything that we saw. I'll just add one thing. The lion's share of the advertising in the first quarter is local spend, not national spend. So you're most likely seeing pricing in those local market ads than you would be seeing national ads that have no pricing. The national ads have no pricing across the country. The local ads do have pricing. Got it. Okay. That's helpful. And then so when the franchisees signed the new ADAs in December, did that have any impact on the cadence of their opening pipelines for the years ahead? I'm just curious, why is there as much ambiguity as it sounds like, or are you providing potentially temporarily greater flexibility on openings this year? Well, what we're doing is we've gone from grace periods to cure periods. The grace periods were somewhat ambiguous as far as when you need to cure it by. The cure period is less. But the cure period gives you six months from the date you're supposed to deliver something to fix it. And so that does push a number of different obligations, perhaps out of 2024 if you're using it that way. But the cure period is a cure period, and it needs to be cured in that period of time. So there may be something there. But I'll add the following. If I see a good location - this is me speaking for me - I am not going to pass on it because I mentioned earlier, 98% of retail space is leased. You can't find space anywhere easily anymore. It's become quite an exercise to try and find those good retail locations to be able to occupy. That's in spite of some hard times for a few different brands. But as you know, we're one of the three biggest consumers of space in the retail industry. So we need space to make it work. If it's hard to find, that does slow the ship down. In addition, what used to take six to nine months to develop a new club is now 12-14 months. So that pushes it as well. There's a lot of dynamics going on in the marketing of our clubs and the building of our clubs and what have you. We're having to adjust to some of that. I think the Cure periods will be very helpful, especially in the longer term, to having tighter timelines to be able to develop boxes in different territories. And Max, I'd add one thing. We asked franchisees to opt in or opt out by the end of 2023 to the new plan. And as we've said, essentially all stores but two one-store operators did not. And I would say that was pool depth detail. We then had to follow up with contracts, and they have to work through it. And that's going to take a couple of months to finalize all that. So that's more like ocean depth detail, if that makes sense. So what happened by the end of the year was just the beginning of it. We had to do some more work with the contracts that they're now getting exposed to. And to Craig's point about the lead time, so we feel really good about what we've done. The reception has been beyond what we expected. It's just a matter of it all playing through. It's not an increased level of ambiguity. It's not like we're lessening. It's also true that most people were on or ahead of their schedule. There's no makeup period here that they're sort of accelerating through. Hope that makes sense. No, that's great. And then just quick last one to Craig's point on real estate. I guess, why shouldn't we think that the real estate issue is only going to potentially get worse as time goes on? A lot of the growth retail is sort of in that same-sized box that you guys are looking for. 98% of the real estate is accounted for, as Craig said earlier. So I guess, how should we think about that ahead, and why would the headwind would potentially ease at some point in the future? Hey, Max, I'll start that one. So I think the combination, and you've seen all the stuff, whether it's CBRE, JLL, all the folks are saying the same thing. I think CoStar. I think the building of new real estate was definitely at sort of record lows through 2023. New strip centers. The stuff that's available, we're not really interested in. We don't do a lot of malls unless they're getting blown up and created more to look like a lifestyle center. We also don't do a lot of office stuff buildings. That's just not where there's a lot of that available. So it's really, what are we after now? So we think as rates lower, as demand continues to grow from folks like us and others, TJX and other people are looking for similar sites, that that will ultimately improve. It's just going to take some time. I'd say the other part is the interest rates. As the interest rates lower, whether that's 4 moves, 3 moves, whatever, but over the next couple of years, we anticipate lower interest rates. So all that will be a tailwind. The other thing is there are some folks who are walking away from their boxes. And some of those work for us, and some of those don't. We've talked about Bed Bath & Beyond. We've got some of those. So do our in our corporate segment, some of our franchisees do, too. Rite Aid recently announcing some of those spaces work for us. Parking fields have to be big enough. There's a lot of stuff to work through. But as some of that happens, that's also a help. We're still taking down a lot of real estate. It's just in a tightening environment. We think law of supply and demand will ultimately recalibrate to maybe look like what it was pre-COVID. It's just going to take some time. These are ocean liner sort of changes, not cigarette boat. Got it. That's very helpful. Thanks a lot in that regard. Great. Thanks, Max. Appreciate it. Max, I'd just add one more thing. 14 million sq ft of space came in retail space last year, which was half what was the projected demand. It's a problem that we need to work through. But I agree with Tom. Supply and demand usually works itself out once the market understands that there's a need that's not being fulfilled. Your next question comes from Rahul Krotthapalli with JP Morgan. Please go ahead. Good morning, guys. Thanks for taking my question. Craig, you laid out some breadcrumbs at ICR talking more about the smaller format stores being a real possibility, and you talked a little more about it today. You said previously that this will address the current real estate constraints, increase convenience, and touch the trade areas, which were not addressed before. Can you help us think through the format and then also give us a little more insight on this infill strategy and what this could be a potential addition to the TAM? And I have a follow-up. Yeah. Rahul, we are actively working on different format clubs. Tom mentioned, or maybe I did in the opening comments, for infill opportunities, but perhaps even more for smaller population areas that we in the past couldn't get into because we needed a bigger population. We are actively working with some of our franchisees to develop those clubs with them. We're working right now with teams to be able to do those clubs. I'm hopeful that we can add those as opportunities to our pipeline sooner rather than later. We have to look at all opportunities. Again, this has nothing to do with the upsizing that we did the exercise for. That stands on its own. Those are the more traditional clubs that we did a survey on. These would be new opportunities. The huddle we had with the franchisees in mid-October, I talked about Beaver Dam, Wisconsin. Beaver Dam, Wisconsin has 20,000 population in a 40-minute drive time. We couldn't go in there in the past. So to find a way to be able to get it to enter Beaver Dam, Wisconsin, and make it successful for the franchisee that has that club is one of the goals I have to enable us to be in places we couldn't be in the past. That's helpful. And the follow-up is on international and M&A. Previously, it was contemplated if M&A can be a potential consideration to enter new markets, even in Europe, given your brand equity, possibly even buying an established operator and reformatting stores to Planet Fitness brand. Did you take this strategy further at all or have any conversations post-2020? And if not, can you also talk more on leveraging the brand equity to organically compete against low-cost providers like Basic-Fit, which I think has almost 200 clubs in Spain today, and also AltaFit? So I'm just curious on your thoughts there? Yeah. I'll start that one, Rahul. So we have, as you can imagine, given our position in the industry, we've had in the U.S. and internationally a whole bunch of brands come our way. As we've looked at it, what's tricky about it is pick your brand in Europe. If we buy it, we're buying members who basically belong to gyms that are pretty aggressive in how they work out. They're definitely not our environment. They've got some of them have tire-flipping areas, big weights, not a lot of cardio, a lot of strength. Some even have boxing rings you've heard us talk about. So if we buy it, we're buying the asset. We have to spend a fair amount of money to redo the box. If they have a pool, we got to take that out. There's a lot of dollars that get invested in that. So we've paid to buy the company. We're paying to reformat the stores. We're likely going to lose a lot of the members. So we're essentially buying the box itself and then spending a lot of money. Plus, we have to then change the brand and all that. So as we've looked at it, we've tried to make it work. We haven't yet found a case where it makes sense. So instead, what we're doing in Spain is we're taking a fresh start where we're going to build some stores, get it going, and then refranchise them. We think it's an attractive market. We think while Basic-Fit and others have and AltaFit, we're familiar with all these folks. They have a presence. They just don't do what we do. Just like the U.S. had a bunch of people who do what they do, and then we came along and disrupted the industry, we still haven't found anybody who does what we do and appeals to the first-time casual gym-goer, getting people off the couch. You've heard us talk about the penetration in the U.S. is among the highest. There's only one other small country that's higher. All these other countries have lower percent of the population participating. We think that's because it's intimidating, and it's expensive. We break those barriers down. We're excited about it. We think Spain is a great opportunity. Our balance sheet allows us to put a little capital in play to accelerate where our presence would get to in a few years versus where a new franchisee would be able to get it to. Thanks, Tom. That's really helpful. And we'll miss working with you by the end of this year. Oh, thank you. I'm still around for a little while, so you haven't gotten rid of me yet. But I appreciate that, Rahul. Thanks. Your next question comes from Joe Altobello with Raymond James. Please go ahead. Thanks. Hey, guys. Good morning. So first question on the member base. As it continues to get younger, are you guys seeing any difference in average lifetime value between your younger and older member cohorts given the lower Black Card penetration rates? I'm not sure how the cancel rates might differ. Yeah, I can start that. And Craig may add. Joe, it's still incredibly attractive for a Gen Z contract value for their membership. It is a little bit below where it is on average, only to your point, because when they're younger, their Black Card mix tends to be lower. But you've heard us talk about, as we look at the different ages within Gen Z, there are step function changes in their Black Card penetration as they age in. And once they get to their 20s, they look much more like the average of roughly 60% of them are Black Card members. So we'll take that trade all day long because the contract value, even with a slightly lower Black Card mix, is still many orders of magnitude above the cost of getting a new member. Got it. Very helpful. Maybe just to follow up, the 5%-6% comp growth and thanks for clarifying that, by the way. Is the composition of that still expected to be roughly 75%-80% member growth? And does it assume the $15 Classic Card pricing test becomes permanent this year? Yeah, that's a good question, Joe. It is still predominantly member growth-driven. And it assumes the current pricing that we have in the country. Does not assume we roll any new price test nationally. Okay. Great. Thank you. You bet. Your next question comes from Sharon Zackfia with William Blair. Please go ahead. Hi. Good morning. I appreciate all the color on what's going on. I'm also interested, though, in the partnership side of the equation as you've expanded that. How pertinent have those partnerships been to getting new members or getting them to trade up to Black Card? And concurrently with that, have you explored any opportunities to kind of tap into what's happening with GLP-1s and the need there to build muscle mass? And it seems like as a convenient, low-judgment club that you would be well-poised to benefit if this does become a more prevalent trend. Yeah. Let me start with the last question. So the weight loss drugs that are now available clearly present an opportunity for us to teach people how to maintain their muscle mass and, in fact, enhance their weight loss journey by being healthier about it but also speeding it up because, as you know, exercise helps burn off calories, too. So we see that as an opportunity. We have some plans in place to develop a few things to augment what we offer in a club to those type of people. It's still not a big portion of the population. I believe there's only 4 million prescriptions right now. But it's clearly gaining a lot of momentum. I'd also say that traditional weight loss drugs are fairly expensive for our members. So I'd say, on an average basis, our membership perhaps is lower. Users of that because of the affordability factor. I'm sort of struggling with that. The Perks was the other one. Oh, the Perks. The Perks The Perks continues to be a nice add-on to what we offer our members. And in some ways, we hope that over time, it's an anchor for them to maintain their membership. We've seen small takedowns on that and small additions to those using it to keeping their memberships for a longer period of time than the average. I still think we've got a lot of work to do in that area to make it as complete as it possibly can be for the lifestyle needs of our members. In the past, we've used products. But I believe there's also services we could augment, whether it's insurance or mortgages or what have you, that people use on an all-the-time basis versus a onetime purchase thing. Okay. Thank you. Hi. Your final question comes from Alex Perry with Bank of America. Please go ahead. Hi. Thanks for taking my question. And Tom, congrats on your retirement. I just wanted to ask a little bit more about Black Card penetration. So what gets Black Card penetration going in a positive direction? Or should we expect, given the Gen Z acquisition, continued declines in Black Card penetration? Do you think potentially narrowing the pricing gap between Classic Card and Black Card could help this? Well, preliminarily, we've seen some movement in that direction. But again, tests are still somewhat new. But the more you can narrow the price, common sense says, the more the opportunity is there to trade people up. So that clearly helps, maybe. And we continue to experiment with pricing. It's something that we will continue to do for a long time because I think there's opportunities to look at ways that we can value engineer the pricing so that members still feel they're getting a great deal but also allow us to move the margin equation, especially with some of the changes that have occurred in the industry with the supply costs or labor costs or what have you. Perfect. That's really helpful. And then my follow-up is just on international. Is Spain the only international market, new international market, you expect to enter this year? And then could you just how many stores in Spain were you expecting to open this year? And then are you looking at other European markets? Thank you. Hey, Alex. We're only talking about Spain at the moment. I think we're still on our path to, now that we've bolstered that team a bit here over the last few months, to increase our pace from one-ish a year to ultimately two to three a year. We're still in the early stages of ramping that up. We feel really good about Spain. It's a great country to enter in Continental Europe. We believe, over time, that it could be a 300+ store opportunity. I think time will tell. But. Active market. And we feel really good about it. We have set aside the capital to do a few stores this year as part of our plan. We're working our way through to getting leases and building our pipeline. Time will tell exactly how many we open this year versus next year. But we feel good about the progress we've made in a short period of time. And I think, as I mentioned earlier, coming in as the franchisor really just opens up more doors than a franchisee who might be starting off on their own. So we like how we're approaching this. And it's one thing to say we're going to add one or two markets a year. But it's a different thing, obviously, to say a Spain at 300+ location potential versus a New Zealand, which we're happy to enter, but it's just a much smaller opportunity. So this is going to look and feel much more like Mexico and Canada size store potential-wise. And we feel good about that. So more to come on where else in the world down the road. But we're very excited about this one. Perfect. That's really helpful. Best of luck going forward. Yeah. Thank you, Alex. This will conclude the question-and-answer session in our call. I will now turn it back over to Craig Benson for closing remarks. Well, listen, we are very appreciative of your time this morning. Look forward to talking to you in the near future. Thank you for supporting Planet Fitness and helping us along our journey. Thanks. Have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.