• Total Revenue: Increased 18.7% to $663.3 million in Q4 2024.
• Membership Dues and Enrollment Fees: Increased 18% in Q4 2024.
• In-Center Revenue: Increased 19.4% in Q4 2024.
• Comparable Center Revenue: Increased 13.5% in Q4 2024.
• Center Memberships: Increased 6.4% to over 812,000 by the end of Q4 2024.
• Total Memberships: Approximately 866,000 by the end of Q4 2024.
• Average Monthly Dues: $201, up approximately 10% from Q4 2023.
• Average Revenue per Center Membership: $796, up 12% from Q4 2023.
• Net Income: $37.2 million, up 57% in Q4 2024.
• Adjusted Net Income: $60.3 million, up 59% in Q4 2024.
• Adjusted EBITDA: $177 million, up 28.5% in Q4 2024.
• Adjusted EBITDA Margin: 26.7%, increased 210 basis points from Q4 2023.
• Net Cash from Operating Activities: Increased 24% to $163 million in Q4 2024.
• Free Cash Flow: Approximately $27 million in Q4 2024.
• Full-Year Total Revenue: Increased 18.2% to $2.621 billion in 2024.
• Full-Year Net Income: Increased 105% to $156.2 million in 2024.
• Full-Year Adjusted Net Income: Increased 55% to $200.5 million in 2024.
• Adjusted Diluted EPS: $0.95, compared to $0.64 in the prior year.
• Full-Year Adjusted EBITDA: Increased 26.1% to $676.8 million in 2024.
• Full-Year Adjusted EBITDA Margin: 25.8%, increased 160 basis points from 2023.
• Debt Levels: Approximately $1.5 billion, with a net debt leverage ratio of less than 2 times expected by end of 2025.
• New Club Openings: Expected 10 to 12 new clubs in 2025.
• LT Digital Subscribers: Over 1.7 million, growing by more than 100,000 per month.

• Warning! GuruFocus has detected 5 Warning Sign with LTH.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Life Time Group Holdings Inc (NYSE:LTH) reported a significant increase in total revenue by 18.7% to $663.3 million for Q4 2024, driven by an 18% increase in membership dues and enrollment fees.
• The company achieved a record net income of $37.2 million, up 57% from the prior year, and adjusted net income increased by 59% to $60.3 million.
• Adjusted EBITDA rose by 28.5% to $177 million, with an adjusted EBITDA margin of 26.7%, reflecting improved operational leverage.
• Life Time Group Holdings Inc (NYSE:LTH) experienced a 6.4% increase in center memberships, ending the quarter with over 812,000 memberships.
• The company has a robust pipeline for new club openings, expecting to open 10 to 12 clubs in 2025, with plans to maintain current debt levels while growing revenue and EBITDA.

Negative Points

• Despite strong financial performance, the company faces potential risks from macroeconomic pressures that could impact future growth.
• The reliance on sale-leaseback transactions for funding expansion could expose the company to market fluctuations in real estate rates.
• The company's debt levels remain significant at approximately $1.5 billion, which could pose challenges if interest rates rise.
• While digital subscriptions have grown, the monetization strategy for the LT Digital app remains unclear, which could affect future revenue streams.
• The company is heavily investing in AI and digital platforms, which may not yield immediate returns and could strain resources if not managed effectively.

Q & A Highlights

Q: How is Life Time Group Holdings planning to fund its expansion, particularly with regard to the sale-leaseback market? A: Bahram Akradi, CEO, explained that they have agreements with a major partner for $240 million to $250 million worth of sale-leasebacks this year. The demand for their real estate is strong due to their reliable rent payments, even during COVID. They plan to use sale-leaseback proceeds to fund growth, maintaining debt levels around $1.5 billion, which implies a net debt leverage ratio of less than 2 times by year-end.

Q: What led to the increase in guidance for 2025, particularly on the EBITDA line? A: Erik Weaver, CFO, noted that strong membership dues, retention, and cost control have exceeded expectations, leading to the raised guidance. The company has seen strong flow-through from revenue, contributing to increased margins.

Q: Can you clarify the leverage expectations and the role of sale-leasebacks in cash flow? A: Bahram Akradi stated that the goal is to maintain debt-to-EBITDA under 2.25 times, with expectations to be under 2 times by year-end if debt remains at $1.5 billion. Sale-leasebacks are included in cash flow expectations, allowing for continued growth without significantly increasing debt.

Q: How does Life Time Group Holdings view the potential for pricing opportunities as club capacity increases? A: Bahram Akradi explained that as clubs reach capacity, they have pricing opportunities through enrollment fees and dues adjustments. The company focuses on maintaining a high-quality experience, which naturally leads to increased dues and in-center revenue.

Q: What is the company's strategy for managing growth in terms of people and organizational structure? A: Bahram Akradi emphasized the importance of AI in improving operational efficiency and customer experience. The company aims to maintain a lean structure with no more than three layers of decision-making to enhance customer service and operational efficiency.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.