Life Time Group Holdings, Inc. Q3 FY2025 earnings call

• Growth strategy: Accelerate new club growth, focus on member experiences, grow member engagement and revenue per center membership. Expect to deliver 12 to 14 new clubs in 2026 and beyond. - Member experiences: Membership optimization, improving mix with more couples and families, limiting qualified memberships. Average monthly visits per membership up 12.5% year-over-year, total visits up 7% year-over-year, revenue per center membership up 11.3% year-over-year, in-center business revenue up 14.4% year-over-year. - AI and digital: Expect to release new features and capabilities of L•AI•C by end of 2025. - LTH Nutrition: Continues to grow, expanding product lines. - MIORA locations: Expect to add 4 to 5 new locations in various clubs by early 2026.

Total revenue increased 12.9% to $783 million. Average monthly dues grew 10.0% year-over-year to $218. Comparable center revenue grew 10.6%. Net income for the quarter was $102 million, an increase of 147%. Adjusted net income was $93 million, up 65.2% year-over-year. Adjusted EBITDA was $220 million, an increase of 22%, and the adjusted EBITDA margin improved by 210 basis points to 28.1%. Net cash provided by operating activities rose approximately 66% to $251 million. Free cash flow was $63 million for the third quarter. The company ended the quarter with nearly 841,000 center memberships, including on-hold memberships, total memberships reached approximately 891,000.

• Raised full-year comparable center revenue guidance to be between 10.8% and 11.0%. - Expect to complete between $55 million and $65 million of additional sale-leaseback transactions before the end of 2025. - Expect to deliver 12 to 14 new clubs in 2026 and beyond. - 11 of the 2026 clubs are large format, 13 clubs scheduled to open in 2026 are currently under construction.

Forward-looking statements 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.

Q: John Heinbockel asked about the biggest opportunities in in-center revenue and DPT penetration.

A: Bahram Akradi said the personal training program is doing well, there's opportunity in cafes and spas, and they're working on MIORA and LCH.

Q: Arpine Kocharyan asked about comparable center revenue guide and maximizing revenue.

A: Bahram Akradi and Erik Weaver talked about membership optimization, mix of couples and families, and unit economics being attractive.

Q: Brian Nagel asked about consumer dislocations and capital allocation.

A: Bahram Akradi said they're not seeing new trends, and capital allocation includes balance sheet strength and potential stock buyback discussion.

Q: John Baumgartner asked about relative value and LTH Nutrition.

A: Bahram Akradi and Erik Weaver said the value proposition is strong, and LTH Nutrition strategy involves phased rollout and purity testing.

Q: Kate McShane asked about new club breakdown by market and labor expenses.

A: Bahram Akradi said new and existing markets have similar success, and labor expenses are planned for.

Q: Eric Des Lauriers asked about dynamic personal training and new club expansion.

A: Bahram Akradi said it varies by club, location, and trainer, and new club expansion is part of growth strategy with AI and digital initiatives.

Q: Owen Rickert asked about Life Time Living and Work.

A: Bahram Akradi said they're working on different vehicles for Life Time Living and Work.

Q: Molly Baum asked about new club margins and sale-leasebacks.

A: Erik Weaver and Bahram Akradi talked about margins, average club size, and analysis of sale-leaseback vs balance sheet.

Q: Chris Woronka asked about club design.

A: Bahram Akradi said they focus on flexibility in club design.