Life Time Group Holdings, Inc.

Good morning. Welcome to the Lifetime Group Holding first quarter 2023 earnings conference call. Please devise that reproduction of this call in whole or in part is not permitted without written authorization from the company. As a reminder, this conference is being recorded. I will now turn the call over to Ken Cooper with Invest Relations for Lifetime.

Good morning and thank you for joining us for the Lifetime first quarter of 2023 earnings conference call. With me today are Brahm McCrotty, founder, chairman, CEO, and Bob Houghton, 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. Also, the company will discuss certain non-GAAP financial measures, including adjusted EBITDA, net debt, free cash flow before growth capital expenditures, and free cash flow. For purposes of this call, free cash flow is defined as net cash provided by operating activities after total capital expenditures. This information, along with the reconciliations to the most directly comparable gap measures, where possible and without unreasonable efforts, are included in the company's earnings release issued this morning, our 8K filed with the SEC, and within the investor relations section of our website. Our website also includes a supplemental presentation pertaining to the delivering of our business, a topic that Brahm and Bob will address this morning. I'm now pleased to turn the call over to Bob Houghton. Bob?

Thank you, Ken, and good morning to all our stakeholders on today's call. We appreciate you joining us this morning. I will briefly cover our first quarter 2023 results, the full details of which can be found in the earnings release we issued this morning. Brahm will then provide a bit more color on the quarter and how we will continue to grow our business improve our profitability, and reduce our leverage through the remainder of the year. We are off to a strong start this year. First quarter revenue increased 30% to $511 million, driven by a 31% increase in membership dues and enrollment fees, and a 28% increase in in-center revenue. Center memberships increased 13% as we ended the quarter at approximately 764,000 memberships. We added 39,000 center memberships during the quarter, including one of the strongest January enrollments in our more than 30-year history. Including digital on hold memberships, total memberships increased 9% to approximately 814,000 memberships. First quarter average center revenue per membership increased to $667, up from $640 in the fourth quarter, and up 15% from $580 in the prior year quarter, as we continue to benefit from higher membership dues and increased in-center activity. We generated net income for the first quarter of $27 million, compared with the net loss of $38 million in the first quarter of 2022. Adjusted EBITDA increased 196% to $120 million and our adjusted EBITDA margin increased 13.1 percentage points to 23.5% versus 10.4% in the first quarter of 2022. We delivered another quarter of improving cash flow with net cash provided by operating activities of $74 million versus $9 million in the prior year quarter. As I move to an update on our adjusted EBITDA and leverage ratio, I will make reference to the new supplemental slides which are posted to our IR website. As detailed on slide three, we reduced our net debt to adjusted EBITDA leverage in the quarter and expect further improvement in this key metric as we continue to grow our adjusted EBITDA and reduce our net debt. We are very pleased with our start to 2023. We are successfully executing our strategies to deliver significant revenue growth and improve profitability through growing memberships, increasing club usage through our expanded programming, and opening new clubs that are ramping faster in great locations across the country. We are also clearly seeing the benefits from the rewiring of the business and the strategic initiatives that we put in place last year. And we remain confident in our ability to increase cash flow and improve our balance sheet. I will now turn the call over to Buram.