MCW

Key Points - Strong Q3 performance with revenue up 6% and adjusted EBITDA up 10%, along with 3.1% comparable store sales growth for ten consecutive quarters. - UWC membership grew 6% year-over-year, with Titanium 360 tier at 25% penetration. Base membership price increase rollout completed, with positive member adoption and retention trends. - Acquired 5 stores in Lubbock, Texas, expanding footprint to 9 locations and doubling market share. - Opened 5 new greenfield locations, with 30 new stores expected to open by year-end. - Innovation focus on improving customer experience, with new major innovation planned for 2026. - Expanded marketing test in Q4 to drive incremental sales growth. - Committed to building a best-in-class team, investing in their growth and development.

Forward-Looking - Reiterated full-year guidance for fiscal year ending December 31, 2025. - Comparable store sales expected at high end or slightly above 1.5%-2.5% range. - Revenue near high end of $1.046 billion to $1.054 billion range. - Adjusted EBITDA at high end of $338 million to $342 million range. - Q4 includes 17 new store openings and modest sales lift from marketing tests.

Revenue increased 6% to $263 million, adjusted EBITDA rose 10% to $87 million, and comparable store sales grew 3.1%. UWC was the primary growth driver, representing over 75% of total sales. UWC membership increased 6% year-over-year, with the Titanium 360 tier reaching approximately 25% penetration of the total membership base. Retail comps performed in line with expectations for a low double-digit decrease, while UWC comps increased high single digits.

Risks - Industry competition moderation but retail remains down low double digits, raising economic sensitivity concerns. - Potential M&A multiples drop, impacting acquisition opportunities. - Weather patterns can impact comp store sales trends.

Q: Could you help understand sales upside in Q3 and start to Q4?

A: Jedidiah Gold noted Q3 sales were positive each month, with revenue per member growth fueled by Titanium mix. October is the toughest lap, in line with expectations.

Q: What's the pecking order of cash flow usage?

A: Jedidiah Gold stated greenfield development is highest and best use of capital, with options including share buyback, debt paydown, and M&A.

Q: How does base price increase wrap into 2026?

A: John Lai said pricing is market-specific, with base price increase rollout phased, and most benefit to be realized in 2026.

Q: Color on membership trends?

A: John Lai mentioned sequential membership base flat, focusing on increasing retail traffic to convert to membership, with churn steady at ~5%.

Q: More color on marketing test?

A: John Lai and Jedidiah Gold said Q2 had mid-single-digit comp lift in pilot markets, Q4 test underway with focus on incremental sales and ROAS.

Q: Competitive intensity and retail dynamics?

A: John Lai and Jedidiah Gold discussed economic sensitivity affecting lower income demographics, and focus on growing member base and increasing member value simultaneously.

Q: Marketing test expansion and spend?

A: John Lai and Jedidiah Gold said Q4 test underway, with focus on ROAS and justifying ad spend investment.

Q: Titanium membership and market performance?

A: John Lai and Jedidiah Gold discussed Titanium launched in 2023 with rolling rollout, membership growing in 25% range, and market performance varying by operator leadership.

Q: M&A and multiples?

A: John Lai said M&A is lumpy, multiples have dropped precipitously, and industry expected to skinny down with PE-backed platforms exiting.

Q: Retail comps in Q4 and region trends?

A: Jedidiah Gold said Q4 retail comps expected to be negative, with weather and regional variables impacting comps.