Life Time Group Holdings, Inc.

Greetings and welcome to the Lifetime Group Holdings Inc. Q1 2026 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 anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Connor Feenberg, Senior Vice President, Treasury and Investor Relations. You may begin.

Good morning. Thank you for joining us for the first quarter 2026 Lifetime Group Holdings Earnings Conference Call. With me today are Buram Akradi, 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, 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 and earnings supplement issued this morning, our 8-K 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. We appreciate you joining us for our Q1 business and financial update. Please note that this morning we posted an earnings supplement on our investor relations website which includes additional detail on our membership mix and comparable center revenue. Starting with our first quarter revenue, total revenue increased 11.7% to $789 million, driven by continued strength in performance across our portfolio, including higher dues revenue and strong utilization of our in-center businesses. Comparable center revenue grew 8.6%, slightly above our expectations. As outlined in the earnings supplement, Components of our comparable center revenue were as follows. Improved membership mix, which contributed 3.5% growth. This includes changes in membership types, the replacement of lower dues memberships with higher dues memberships, which we refer to as churn, and continued expansion of clubs into more affluent higher dues markets. Price contributed 3% growth. This includes legacy membership dues increases and changes to the new joint price of clubs within the previous 12-month period. And in-center businesses contributed 2.3% growth due to continued strength and utilization of our in-center businesses, particularly dynamic personal training. Volume contributed a negative 0.2% to comparable center growth. This was driven by a reduction in qualified medical memberships, which I'll discuss shortly. As expected, comparable center revenue growth continues to move towards our long-term target of 6% to 8%. Average monthly dues were $230, up approximately 10.5% year-over-year, and average revenue per center membership was $930, up 10.2% year-over-year. Growth in average dues was driven primarily by positive membership mix trends and execution of our pricing strategy, as I just described. We ended the quarter with nearly 838,000 center memberships, which reflects 1.4% growth. As we've discussed on past calls, we have been managing our membership mix. Part of our strategy has been to limit certain qualified memberships, specifically those administered by third-party medical insurance providers. We refer to these as qualified medical memberships. These memberships have significantly lower average dues. In Q1 2026, qualified medical memberships represented only 3.4% of our total dues revenue. We expect this to be approximately 3% by the end of the year and continue to represent a smaller proportion of our dues revenue over time. In the first quarter, qualified medical memberships declined by approximately 15,000, down 14.9% year-over-year, while all other memberships grew by approximately 27,000, up 3.7% year-over-year, in total resulting in 11.9% growth in total dues revenue. Due to further year-over-year reductions in qualified medical memberships, we expect total center membership growth of 0.5% to 1% in the second quarter, 1% to 1.5% in the third quarter, and 2% to 3% in the fourth quarter. However, we expect membership growth excluding qualified medical memberships of 3.5% to 3.8% in the second quarter and 4% to 5% in both the third and fourth quarters. With this strategy, we expect to deliver revenue growth of 10% to 12% for each quarter and the full year. Moving on to net income. For the quarter, net income was $88 million, an increase of 15.8% year over year. First quarter, net income included approximately $8 million of net tax-affected items excluded from adjusted net income, primarily consisting of share-based compensations. Net income in the prior year benefited from approximately 1 million of net tax-affected items, driven primarily by 12.6 million of income tax benefits, resulting from a significant exercise of stock options by our chief executive officer ahead of their 2025 expiration, partially offset by share-based compensation. Adjusted net income, which excludes the tax-affected impact of these items, was $96 million, up 27.4% year-over-year. Adjusted EBITDA was $227 million, an increase of 18.3% over the prior year quarter, and our adjusted EBITDA margin improved by 160 basis points to 28.7%. The primary factors for our margin expansion included greater leverage on our center operating costs and corporate G&A, an overperformance of dues revenue, and timing of sale leasebacks. Of the 160 basis point margin expansion, approximately 30 basis points relates to employer payroll taxes associated with the CEO's option exercises incurred in Q1 2025. As noted in our earnings release, we updated the midpoint of our full year adjusted EBITDA margin guidance to 28%. This guide includes the impact from a majority of our clubs that are opening in the second half of 2026 and the associated pre-opening expenses and early operating ramp impact on margin. Net cash provided by operating activities increased to $199 million, approximately 8% higher compared to the prior year quarter. Total capital expenditures were $260 million, up 82% from the prior year, reflecting construction activity in support of our new club openings for 2026, as well as the start of construction on clubs planned for 2027. As of today, we have opened five of the 14 clubs scheduled for opening this year. The remaining nine clubs and a number of the clubs scheduled for 2027 opening are under construction. In April, we closed on sale leaseback transactions that generated approximately $200 million of sale leaseback proceeds and expect to complete approximately $400 million for the full year, supporting our ongoing focus on generating annual positive free cash flow. With that, I will now pass the call to Bron. Bron?