Earning Date, Transcript Summary & Report

Revenue Increase Analysis: Total revenue increased 18.7% to $663.3 million in Q4 2024, driven by an 18% increase in membership dues and enrollment fees and a 19.4% increase in incentive revenue.

Strong Member Engagement Growth: Comparable center revenue growth of 13.5% in Q4 was the largest of the year, indicating strong member engagement.

Membership Growth Increase: Center memberships increased 6.4% year-over-year, ending the quarter with over 812,000 memberships, and total memberships reached approximately 866,000.

Membership Dues Increase: Average monthly dues rose to $201, a 10% increase from the previous year, and average revenue per center membership increased by 12% to $796.

Net Income Surge: Net income for Q4 was $37.2 million, up 57%, and adjusted net income was $60.3 million, up 59% from the prior year quarter.

Q4 Adjusted EBITDA Growth: Adjusted EBITDA for Q4 was $177 million, reflecting a 28.5% increase, with an adjusted EBITDA margin of 26.7%, up 210 basis points year-over-year.

Operating Cash Flow Increase: Net cash provided by operating activities increased approximately 24% to $163 million compared to Q4 2023, and free cash flow was approximately $27 million for the third consecutive quarter.

Total Revenue Increase: For the full year, total revenue increased 18.2% to $2.621 billion, with a 19.1% increase in membership dues and enrollment fees and a 16% increase in in-center revenue.

Net Income Surge: Net income for the full year increased 105% to $156.2 million, and adjusted net income increased 55% to $200.5 million, with adjusted diluted earnings per share rising to $0.95.

Revenue and EBITDA Guidance: The company raised its revenue guidance for 2025 to $2.925 billion to $2.975 billion and adjusted EBITDA guidance to $780 million to $800 million, reflecting confidence in continued growth.

Membership Retention Success: Record membership retention levels were achieved, indicating strong member satisfaction and engagement, with expectations to exceed these levels in 2025.

Club Expansion Plans: The new club pipeline is robust, with plans to open 10 to 12 clubs in 2025, and potential for more openings in 2026 and 2027.

Subscriber Growth Momentum: LT Digital, the free digital subscription service, has over 1.7 million subscribers and is growing by more than 100,000 subscribers per month without marketing efforts.

Nutritional Supplements Growth: LTH nutritional supplements are experiencing strong month-over-month growth, and MIORA, the health optimization offering, is progressing well with a second location opening soon.

Membership Growth Concerns: Membership growth is slowing, with only a 6.4% increase compared to the previous year, which may indicate market saturation or increased competition.

High Debt Risk Concerns: Despite revenue growth, the company is maintaining a high debt level of approximately $1.5 billion, which could pose risks if market conditions change or interest rates rise.

EBITDA Margin Improvement: The adjusted EBITDA margin increased only slightly by 160 basis points year-over-year, suggesting that while revenue is growing, operational efficiency improvements may not be as significant as expected.

Membership Growth Uncertainty: The company has not provided specific guidance on future membership growth rates, which could lead to uncertainty among investors regarding long-term sustainability.

Expansion Risks: The reliance on new club openings (10 to 12 expected in 2025) for growth may be risky if market conditions do not support such expansion or if operational challenges arise in new locations.