Life Time Group (LTH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 18.9% year-over-year to $667.8 million, driven by strong membership and in-center revenue growth, higher member utilization, and new center openings.

• Net income rose to $52.8 million, up from $17.0 million in Q2 2023, reflecting improved profitability and operational leverage.

• Adjusted EBITDA increased 27.6% to $173.5 million, with a margin of 26.0%, reflecting operational leverage and structural improvements.

• Achieved net debt to adjusted EBITDA leverage ratio of 3.0x, two quarters ahead of plan, with a target of 2.5x or less in upcoming quarters.

• Positive free cash flow was delivered before sale-leaseback proceeds, reflecting strong operational performance.

Financial highlights

• Q2 2024 total revenue: $667.8 million (+18.9% YoY); net income: $52.8 million (+210.6% YoY); adjusted EBITDA: $173.5 million (+27.6% YoY).

• Diluted EPS for Q2: $0.26, up from $0.08 in the prior year period.

• Free cash flow for Q2 2024: $175.1 million, including $143–$149 million from sale-leasebacks and land sales; $26 million positive free cash flow before these proceeds.

• Six-month net cash provided by operating activities: $260.8 million, up from $216.3 million year-over-year.

• Center memberships at period end: 832,636 (+5.4% YoY); average center revenue per membership: $794 (+13.3% YoY).

Outlook and guidance

• Full-year 2024 revenue guidance raised to $2.56–$2.59 billion, implying 14.6% growth in the second half of 2024.

• Adjusted EBITDA guidance increased to $642–$652 million, with a projected 16.7% growth in the back half of the year.

• Net income guidance: $142–$148 million (vs. $76.1 million in 2023); rent expense guidance: $300–$312 million.

• Management targets opening 8–12 new locations per year, focusing on asset-light models in affluent markets.

• Targeting a double-B credit rating and further debt maturity extensions.