Life Time Group (LTH) The 2nd Annual Morgan Stanley Travel & Leisure Conference 2024 summary

Key strategic themes

• Focus on positioning as a healthy living and aging brand, not just fitness, with high-end, comprehensive offerings across 170+ large clubs nationwide.

• Membership pricing reflects bundled value, with per-use costs remaining competitive despite premium rates; demand is strong, with many clubs on waitlists and minimal advertising spend.

• Pipeline includes 85 deals for new locations, with expansion balanced across markets and formats, targeting 8-12 new clubs per year.

• Digital strategy aims for 3-5 million digital subscribers in 2-3 years, leveraging existing content and infrastructure, with monetization through partnerships and e-commerce.

• Brand strength and high NPS drive opportunities for further brand extension and customer engagement.

Financial outlook and growth

• Long-term financial targets include 10%-12% annual top-line and EBITDA growth, with 4%-5% mature comp growth from pricing and in-center spend, and 7%-8% from new or ramping stores.

• Free cash flow is expected to exceed $400 million next year, supporting both debt reduction and reinvestment in growth.

• Sale-leaseback strategy for new clubs will accelerate as cap rates improve, with methodical execution to optimize tax and cash flow efficiency.

• Maintenance and modernization CapEx averages $10 per sq ft, split 60/40 between upkeep and upgrades, supporting club desirability and waitlists even for older locations.

• MIORA, a new wellness initiative, is being piloted and expected to become a substantial business by 2025, leveraging existing spa spaces and medical expertise.

Risk management and resilience

• Membership base is highly engaged, with average usage at 12 visits per month, making the business more recession-resistant than in the past.

• Inflation is seen as manageable due to pricing power and fixed cost structure; recession is not expected to significantly impact retention or spend.

• Execution focus includes identifying and improving underperforming clubs, with leadership and casting seen as key drivers of club performance.