Life Time (LTH) 1 Aug 24 2024 Q2 Earnings call transcript

Life Time Group Holdings, Inc. recently reported its Q2 2024 earnings, showcasing a remarkable 19% increase in total revenue, marking a significant milestone for the company. The earnings call, led by executives Bahram Akradi, Founder, Chairman, and CEO, and Erik Weaver, Executive Vice President and CFO, highlighted the company's financial performance, strategic initiatives, and future growth prospects.

Financial Highlights and Performance

Total revenue for Q2 2024 reached $668 million, a 19% increase from the previous year. This growth was driven by a 20% increase in membership dues and enrollment fees, and an 18% increase in incentive revenue. Active memberships also rose by 5%, ending the quarter with nearly 833,000 memberships, which increased to approximately 879,000 when including digital on-hold memberships. Average monthly dues saw a notable 13% increase to $198, demonstrating the company's ability to maintain and grow its customer base.

Net income for the quarter stood at $53 million, a significant increase from $17 million in the second quarter of 2023. Adjusted net income was $52 million, a $14 million increase from the previous year. Diluted earnings per share also saw a rise, with $0.26 compared to $0.08 per share in the second quarter of 2023. Adjusted EBITDA reached $173.5 million, a 28% increase from the second quarter of 2023, with an adjusted EBITDA margin of 26.0%, marking a 180 basis point increase.

Strategic Initiatives and Future Growth

Life Time Group Holdings has been strategically focusing on several initiatives aimed at enhancing its offerings and expanding its reach. The company has seen strong performance in its in-center business, with a 20% increase in membership dues and enrollment fees. The company aims to continue improving its in-center business, with a focus on areas such as spa, café, personal training, and other services.

Life Time Group Holdings also plans to continue its expansion, with a robust pipeline of 30-plus locations slated for delivery over the next three years. The company has been deliberate in its approach to growth, focusing on becoming cash flow positive while investing in strategic initiatives to drive future growth. The company's balance sheet is now stronger, with a net debt to adjusted EBITDA leverage ratio of 3.0x, down from 4.3x in the previous year.

Outlook and Future Prospects

Looking ahead, Life Time Group Holdings is optimistic about its future, raising its revenue guidance for the year to $2.56 billion in the low end and up to $2.59 billion on the high end. This represents a significant increase from the previous guidance and signals the company's confidence in its ability to deliver strong financial performance. The company also expects to achieve a BB credit rating in the near term, further enhancing its financial position.

Conclusion

Life Time Group Holdings' Q2 2024 earnings call underscored the company's strong financial performance and strategic initiatives aimed at driving future growth. With a focus on improving member engagement, expanding its offerings, and strategic expansions, Life Time Group Holdings is well-positioned to continue its growth trajectory. The company's robust financial position, coupled with its strategic initiatives, positions it for continued success in the future.