Life Time Group Holdings, Inc. Q4 FY2024 earnings call

• 2024 was an exceptional year with strong results across all segments.
• Fourth quarter driven by growth in membership dues, in-center revenue, and comparable center revenue.
• Strong member engagement led to record membership retention and higher average dues and revenue per membership.
• Full year 2024 saw significant growth in total revenue, net income, and adjusted EBITDA.
• LT Digital has over 1.7 million subscribers and is growing rapidly.
• LTH nutritional supplements show strong month-over-month growth.
• Miura, the health optimization and longevity offering, is progressing with plans to open a second location.
• Robust new club pipeline with plans to open 10-12 clubs in 2025.

For the fourth quarter, total revenue increased 18.7% to $663.3 million. Membership dues and enrollment fees grew 18%, in-center revenue 19.4%. Comparable center revenue was 13.5%. Center memberships ended the quarter at over 812,000, total memberships at ~866,000. Average monthly dues were $201, up ~10%, average revenue per center membership $796, up 12%. Net income was $37.2 million, up 57%, adjusted net income $60.3 million, up 59%. Adjusted EBITDA was $177 million, up 28.5%, margin 26.7%. For the full year 2024, total revenue was $2.621 billion, up 18.2%. Membership dues and enrollment fees grew 19.1%, in-center revenue 16%. Average revenue per center membership $3,160, up 12.5%. Net income increased 105% to $156.2 million, adjusted net income $200.5 million, up 55%. Adjusted EBITDA was $676.8 million, up 26.1%, margin 25.8%.

• Raised 2025 revenue guidance to $2.925 billion to $2.975 billion and adjusted EBITDA guidance to $780 million to $800 million.
• Expect net income to benefit from reduced cash interest expense due to debt reduction and refinancing.
• Plan to open 10-12 new clubs in 2025 with potential to extend openings in 2026 and 2027.
• Intend to maintain $1.5 billion in debt and aim for a net debt leverage ratio of less than 2 times by the end of 2025.

Q: Congratulations on a fantastic quarter, fantastic year. First, growth question, funding of expansion?

A: Talks about sale-leaseback agreements, expecting $240 to $250 million worth from sale-leasebacks this year, using proceeds for growth.

Q: On lifting guidance for 2025, what changed over the last several weeks?

A: Strong membership dues, high retention, and good cost control.

Q: Do you have a desired club capacity number for large format clubs and pricing opportunity?

A: Discusses club capacity based on visits and member comfort, and pricing opportunities as clubs reach saturation.

Q: Thoughts on EBITDA margin outlook?

A: Margin is healthy, possibly could be slightly more, but want to keep expectations in check.

Q: On LT Digital monetization?

A: Unveiling in summer, will be a companion for health and wellness journey with monetization to happen naturally.

Q: On new center openings and asset-light vs ground-up builds?

A: Pipeline is robust on both fronts, mix and match expected, no specific guidance on split.

Q: On comps and other revenues?

A: Comps accelerating, other revenues include events and can be lumpy but expected 5-6% growth.