This is not per membership. It’s just total visits in 2019. These are all great sequential progresses we’ve made. Part of the other thing that we’ve done during this shift last three, four years, we have shifted more of our personal training revenue, which was a small group, into subscription business, which is all coming in dues with all the signature programs. So when you start looking at the overall picture, clubs are hitting same number of visits or more, they are having lower attrition rates. The dues revenues are significantly higher they’ve been, margins are better than they have been. So I feel like all of those things are working. And now with about 150-plus billion impressions a year, it’s now an opportunity for Life Time sort of to start expanding on, all right, how do we use our brand, our network and our eyeballs?
What other products and services customers can buy from us? So it’s just now time for inventing and rolling out new initiatives to continue to grow the top line and the bottom line for the company out of the same square footage.
John Heinbockel: Okay. Great. And then on the — back to the whole path to free cash flow, right, so what do you think is an acceptable cap rate? My guess is probably in the mid-6s. What’s the prospect for adjustable cap rates? I think that was something you guys were considering. And then lastly, to sort of get to free cash flow positivity next year, it looks like CapEx has to be down around $400 million, give or take, by my math. Is that way off?
Bahram Akradi: When you talk CapEx, you’re talking maintenance CapEx and growth CapEx combined?
John Heinbockel: Total. Yes, total.
Bahram Akradi: We can fund more than that. It will be probably $450 million plus, is that we can — and more than $300 million of that will be for growth capital. It’s building clubs, remodeling facilities that we take over or finishing our portion of the leasehold improvement with the clubs, the locations, the landlord is building out and handing over to us or we’re taking over the space. So there’s plenty of capital to be cash flow positive after all growth capital.
John Heinbockel: Okay. Thank you.
Bahram Akradi: Thanks.
Operator: Thank you. Our next questions come from the line of Chris Carril with RBC Capital Markets. Please proceed with your question.
Chris Carril: Hi, good morning. So, yes, Bahram, you talked a lot about just the rewiring of the business and the cost structure. But as they’re about to lap some of the step-up in margins that you saw in the 4Q of last year, can you expand a bit more on how you’re thinking about the next opportunities for potential margin expansion and EBITDA growth here going forward?
Bahram Akradi: Yes. So as I mentioned in my remarks, I think the 23.5% to 24% EBITDA margin is sort of what I think the numbers. Can we do better? Possible. I just don’t want to get anybody ahead of their skis with that. I think the key now is just to continue to grow the business. We get — we have quite a few clubs that they are now just going to be ramping through to the newer clubs that we’ve opened. Overall, the business is going to grow more like it’s recovered from COVID in ’24 and then just the natural growth of same-store plus the new stores. And that’s what is — what we’ve always talked about doing a double-digit top line and bottom-line growth. But yes, I think the — we’re not going to have 101% EBITDA growth quarter-over-quarter, over $107 million that we posted last fourth quarter, but it will be a nice growth.
I mean it will be still a very substantial growth as kind of market of $131 million to $135 million. So I’m proud of that. I mean that is significantly higher than what the numbers had been just before coming in today for the fourth quarter EBITDA. So the team is continuing to perform. I mean just the business is performing, team is performing, not having any major concerns about anything here.
Robert Houghton: Yes. Chris, it’s Bob. Just to add a couple of points to that. We’ll open eight clubs in the back half of this year. So we’ll get a nice ramping benefit from all 8 of those clubs next year. And then because we’ve rewired the corporate office, that won’t grow nearly as fast as revenue grows next year. So those will be a couple of contributors to our EBITDA dollar growth in 2024.
Chris Carril: Got it. Okay. Thanks for all the details. And then I guess for my follow-up, can you maybe talk a little bit about what you’re seeing from your more recent club openings in terms of demand levels, pricing observations? Any detail around what you’re seeing in those recent openings would be great. Thank you.
Bahram Akradi: So most of the clubs have been opening ahead of our projections in our dues revenue substantially more. And frankly, the just very quickly cash flow positive, contribution margin positive at the club level, you know, significantly faster than our previous models. I mean, when we look back into 2019 and back versus how we are opening clubs right now, they are sometimes contribution margin positive in just literally second or third month, which is pretty nice. I mean they’re doing — they are consistently beating the business plan for us.
Chris Carril: Great. Thank you.
Operator: Thank you. Our next questions come from the line of Kate McShane with Goldman Sachs. Please proceed with your question.
Kate McShane: Thanks for taking our questions this morning. Just as a follow-up to one of the previous questions, some of the initiatives that you had planned for the end of fiscal year ’23 for revenue, is that then rolled into Q1? Or is it later into ’24? And then our second question is just around membership fees. Can you talk a little bit more about what you’re seeing with response to higher membership prices? And as we look into ’24, how are you thinking about additional rate increases on your legacy memberships?
Bahram Akradi: So great questions, Kate. First, I expect to roll these things out early. Now there are a number of things that we have to tie in and that’s why the delay is. We are reworking our digital offering and then creating the online business, which is the products, apparel, nutritional products, dynamic nutrition, and our athletic events, our [indiscernible] business, all tie into one seamless engine to make it super easy for our customer. What we are not doing great right now, Kate, is we aren’t taking advantage of all the different connections we have on all different programs we have, and we make actually purchasing things almost difficult for our customers. So there is an essential work being done to systematize all of that.
