Core Insights - The company achieved 12% revenue growth and 13% adjusted EBITDA growth in 2025, driven by a record 181 new club openings and 1.1 million net new members [1] - The brand successfully transitioned to a higher classic card membership price point while maintaining a unique value proposition, resulting in a 10% increase in net new members over the prior year [1] - The brand promise was redefined to focus on younger demographics, with the High School Summer Pass reaching 3.7 million teens and achieving an 8.3% conversion rate to paying members [1] Strategic Initiatives - The company optimized club formats to meet evolving member needs, with 95% of new or remodeled clubs in 2025 adopting layouts that emphasize strength equipment and recovery amenities [1] - Marketing spend was centralized by shifting franchisee contributions to the National Ad Fund to accelerate high-impact technology projects, including AI-enabled CRM and predictive churn models [1] - The brand positioned itself to capitalize on the GLP-1 trend by emphasizing strength training to combat muscle loss, supported by a successful pilot partnership with the healthcare platform Ro [1] Expansion and Growth - The company expanded its international footprint to over 200 clubs and 1 million members, with a strategic focus on converting corporate markets like Spain to franchise models for faster scaling [1]

Financial Data and Key Metrics Changes - The company reported a 12% increase in revenue for 2025, with same-club sales growing by 6.7% and adjusted EBITDA increasing by 13% [4][20] - Adjusted diluted EPS grew by 19%, reaching $0.83 [24] - For Q4 2025, total revenue was $376.3 million, up from $340.5 million in Q4 2024, driven by growth across all segments [22][20] - Adjusted EBITDA margin for Q4 was 38.9%, slightly up from 38.4% in the previous year [24] Business Line Data and Key Metrics Changes - The franchise segment saw a revenue increase of 9.6%, while corporate-owned clubs grew by 7.4% and the equipment segment increased by 15.3% [22] - Black Card penetration reached an all-time high of 66.5%, up 260 basis points from the previous year [21] Market Data and Key Metrics Changes - The company ended 2025 with approximately 20.8 million members and nearly 2,900 clubs globally, reflecting strong market presence [4][5] - The company opened 181 new clubs in 2025, including 104 in Q4, marking the highest quarterly openings in its history [5][16] Company Strategy and Development Direction - The company focuses on four strategic imperatives: redefining brand promise, enhancing member experience, optimizing product offerings, and accelerating new club growth [7][10] - International expansion remains a key growth pillar, with plans to enter one to two new markets annually while scaling presence in existing markets like Mexico and Spain [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2026 would be the lowest growth year in their three-year algorithm due to an extended equipment replacement cycle and the sale of corporate-owned clubs [26] - The company expects system-wide same-club sales growth of 4%-5% for 2026, with plans to open 180-190 new clubs [27][29] Other Important Information - The company has returned nearly $800 million to shareholders through buybacks over the last two years while funding strategic investments for future growth [20] - The company received recognition as one of USA Today's America's Best Customer Service 2026, highlighting its commitment to exceptional service [19] Q&A Session Summary Question: Insights on 2026 guidance and growth algorithm - Management indicated that 2026 would represent the lowest growth year due to specific impacts, but they expect to return to growth targets in subsequent years [31][33] Question: January join trends and weather impact - Management noted that join trends were healthy before a storm impacted volumes, but they have seen a rebound since then [35][36] Question: Black Card penetration and pricing strategy - Management confirmed that Black Card penetration is at an all-time high and that they expect a 75/25 split in revenue growth from rate and volume [42][44] Question: Attrition rates and Click to Cancel impact - Management stated that attrition rates have returned to expectations and that the Click to Cancel feature has positively influenced member experience and retention [60][62] Question: Interest expense increase and debt refinancing - Management explained that the increase in interest expense is due to refinancing at a higher coupon rate and the impact of an accelerated share repurchase [66][67] Question: Join trends and member growth opportunities - Management expressed confidence in driving strong member growth, citing a 10% increase in net members in 2025 despite challenges [91][92]

Financial Data and Key Metrics Changes - The company reported a net member growth of 20.8 million members by the end of 2025, with a total of 181 new unit openings, primarily domestic franchises [3][9] - The company achieved a same-store sales growth of 6.7% for the year [9][10] - The rejoin rate for members who lapse is consistently around mid-30%, indicating strong member retention [5] Business Line Data and Key Metrics Changes - The company has optimized its club formats, with approximately 80% of its estate on some version of an optimized format by the end of 2025, focusing on a balanced mix of strength and cardio equipment [5][6] - The marketing campaign "We Are All Strong on This Planet" launched in Q1 2025 has resonated well with consumers, contributing to member growth [4] Market Data and Key Metrics Changes - The company noted a slight easing in real estate availability, with vacancies improving to 4.3%-4.4%, although still not expecting a significant increase in new openings [18][20] - The company is proactively partnering with franchisees and landlords to secure prime locations as retail closures increase [20] Company Strategy and Development Direction - The company aims for 6%-7% unit growth over the planning horizon, with expectations of accelerating unit openings in 2026 compared to 2025 [21][23] - The company is focusing on international expansion, particularly in Spain, where the brand has shown strong resonance and high Net Promoter Scores [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fitness industry's growth, citing a cultural shift towards fitness awareness among consumers, particularly among Gen Z [42][43] - The company is positioned to leverage its brand and marketing strategies to continue attracting new members and enhancing member experience [42][43] Other Important Information - The company is committed to maintaining a capital-light model, with 90% of its operations being franchise-based [39] - The company has initiated a process to refranchise its operations in Spain to recycle capital and grow the market with franchise partners [32] Q&A Session Summary Question: How did the year-end metrics perform against internal expectations? - Management expressed satisfaction with the year-end metrics, including the strong net member growth and unit openings, which exceeded expectations [9][10] Question: What is the outlook for January member growth? - Management refrained from discussing January specifics but emphasized confidence in the brand's momentum and marketing effectiveness [11] Question: How does the company plan to handle price increases for the Black Card? - Management indicated confidence in the Black Card price increase due to strong consumer demand and the value offered, while also testing enhancements to amenities [13][17] Question: What is the sentiment among franchisees regarding growth? - Management reported strong franchisee sentiment, evidenced by the significant number of new club openings and ongoing investments in equipment [22][23] Question: What are the expectations for international market expansion? - Management highlighted the successful ramp-up of the first club in Spain and the intention to enter new international markets with strong franchise partners [30][32]