Life Time Group Holdings, Inc.

Greetings and welcome to the Lifetime Group Holdings Q4 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Connor Weinberg, VP of Investor Relations and Capital Markets. Thank you, Connor. You may begin.

Good morning, and thank you for joining us for the fourth quarter and full year 2024 Lifetime Group Holdings Earnings Conference Call. With me today are Barah McCrotty, Founder, Chairman, and CEO, and Eric Weaver, Executive Vice President and CFO. During the call, we 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. The company will also discuss certain non-GAAP financial measures, including adjusted net income, adjusted EBITDA, adjusted diluted EPS, net debt to adjusted EBITDA, or what we refer to as net debt leverage ratio, and free cash flow. This information, along with the reconciliations to the most directly comparable GAAP measures, are included, when applicable, in the company's earnings release issued this morning, our 8K filed with the SEC, and on the investor relations section of our website. With that, I will turn the call over to Eric.

Thank you, Connor, and good morning, everyone. As always, we appreciate you joining us for our business and financial update. 2024 was an exceptional year for our company. We achieved many significant milestones and exceeded our expectations with our strong financial results. Starting with our fourth quarter results, total revenue increased 18.7% to $663.3 million, driven by an 18% increase in in our membership dues and enrollment fees, and a 19.4% increase in our in-center revenue. Our comparable center revenue of 13.5% was the largest of the year. This was a result of both membership dues and in-center revenue having the largest comparable center revenue growth of the year in Q4, which is a direct result of the significant engagement we are seeing from our members. Center memberships increased 6.4% compared to last year to end the quarter at more than 812,000 memberships. When combined with our digital on-hold memberships, total memberships ended the quarter at approximately 866,000. Average monthly dues were $201, up approximately 10% from the fourth quarter of last year, and average revenue per center membership was $796, up 12% from the prior year quarter. Net income was $37.2 million, up 57%, and adjusted net income was $60.3 million, up 59% from the prior year quarter. Adjusted EBITDA was $177 million, up 28.5%, and our adjusted EBITDA margin of 26.7% increased 210 basis points versus the fourth quarter of 2023, as we achieved leverage in both our center operations and general administrative and marketing expense from increased revenue. Net cash provided by operating activities increased approximately 24% to $163 million, as compared to the fourth quarter 2023. For the third consecutive quarter, we achieved positive free cash flow. Free cash flow was approximately $27 million, and we had no sale leaseback proceeds in the fourth quarter. For the full year, total revenue increased 18.2% to $2.621 billion, driven by a 19.1% increase in membership dues and enrollment fees and a 16% increase in in-center revenue. Average revenue per center membership was $3,160, up 12.5% from the prior year. Net income increased 105% to $156.2 million and adjusted net income increased 55% to $200.5 million. Adjusted diluted earnings per share was 95 cents compared to 64 cents per share for the prior year. In addition to an increase in income from operations in 2025, we expect net income to benefit from reduced cash interest expense due to our reduced debt levels and the refinancing we completed in the fourth quarter. Based on recent SOFR rates, we expect net interest expense of $90 to $94 million. Adjusted EBITDA increased 26.1% to $676.8 million, and our adjusted EBITDA margin of 25.8% increased 160 basis points compared to the full year 2023. As a result of our intentional and strategic repositioning of the company in prior years, which included the rewiring of our operations, we have continued to expand our operating margins and now expect to achieve adjusted EBITDA margins in excess of 26%. With that, I will now pass the call over to Brahm.