Dan Politzer: Got it. And then just — sorry, just to clarify. Was there a number of units for next year we should be penciling in? Is that 10 to 12 still a good number?
Bahram Akradi: Yes, 10 to 12 is good. Just as I mentioned before, it may — I wouldn’t change your model because we need to provide more color for you guys, Dan. It may take a few more of these clubs to generate the same revenue growth. It may take 14 of them. But we are — I was very clear on my remarks, we’re not in a position to provide guidance for 2024 at this point. But there will be — for the time being, you can plan at least 10 to 12, and there might be more. But I wouldn’t say those — if we did 14, it doesn’t mean you will ramp up your revenue or your EBITDA. It just means some of these are going to be 60,000 square feet assets or 80,000 square feet assets, so they take more of them to accomplish that 120s do. So it’s just a more flexible way of growing our top line and our bottom line.
Dan Politzer: Understood. I appreciate all the color. Thanks guys.
Bahram Akradi: Thank you.
Operator: Thank you. Our next questions come from the line of Simeon Siegel with BMO Capital Markets. Please proceed with your question.
Simeon Siegel: Thanks. Hi, guys. Good morning.
Bahram Akradi: Good morning, Simeon.
Simeon Siegel: Bahram, just on the last question because I think this might be helpful, could you help differentiate from asset-light models where you plan to partner with a third party who might be doing more of the heavy lifting and you collect a very high margin flow-through versus what I think sounds like might be really just getting opportunities to run the same existing approach to clubs you do, but getting lower cost because you get to benefit from other underperforming locations? Does that make sense?
Bahram Akradi: I want you to ask that one more time. I couldn’t quite hear you. It was —
Simeon Siegel: Can you differentiate — so the last one sounds like perhaps you’re getting really good terms from underperforming assets from others. So the asset-light is the same model we know you for, but coming at it with a good basis as opposed to maybe when we had talked about living and work and other models where you could, from an asset-light perspective, partner with someone and it’s not — it actually might be a little bit of a different model. So is that — is there a differentiation there?
Bahram Akradi: Right. So that’s a great question, Simeon. So the asset-light discussion and Life Time Work or Life Time Living is that we are basically using our brand, our $150 billion impressions, our IP, our management system, more like a Marriott or Hilton model, and it’s just more of a license fee, management fee. That’s the asset-light version of that. For the clubs, the asset-light right now, it’s going to break down to two categories. And we have discussions and we have nothing worth anybody modeling anything with. If we do anything internationally, and I’m not talking Canada, but outside of the 2-, 3-hour flight time, we more likely would do those similar to the Life Time Living, Life Time Work, Hilton, Marriott model, asset-light, use our IP.
From U.S., our contribution margin, our business model is so powerful that we want to run these. And I’m not suggesting we would never do a management deal. If it makes sense, we do it. But for the most part, Life Time’s locations are actually owned and operated Life Time, whether is this through a lease or owning the facility. So your question of how this asset-light is coming, we’re buying stuff for — we’re buying buildings today for less than the cost of just land. These are older clubs, and then we put the money into remodeling them. They’re going to be 100,000 square feet facility for significantly less capital than we would have done if we had gone from ground up. So — and/or sometimes landlords who have had other tenants who have not performed.
They’re taking those assets away and they’re coming to us. The fact that we treated all the landlords — and I’ve been saying this repeatedly — absolutely properly during the time that people were not paying rent, we paid all the rent. And that Life Time’s brand and reputation is allowing landlords come to us and make deals with us that they’re completely asset-light for us, but we — it’s no different than we had built the rest of our clubs. Does that answer your question, Simeon?
Simeon Siegel: Yes. Perfect. No, great explanation. And then just quickly, Bob, one quick one around the change in CapEx reporting. Is that just a 23 — is that a change to how you’re approaching CapEx spend or just how you’re reporting it given the comments you’ve made around waiting to see the environment shifts in this year?
Bahram Akradi: No. I want to be clear. I want to have full flexibility of how we shift capital to take advantage of all the opportunities ahead properly and still deliver the Life Time’s standard of making sure everything is like new whether if they’re 10 years old, 20 years old, 25 years old. But the — that flexibility is what — I don’t want to create confusion for you guys. And if I want to take $50 million from one bucket into the other back and forth, it’s just not — it’s not worth getting people confused over. So we’re just going to report the total capital on growth and maintenance CapEx as one going forward.
Robert Houghton: So Simeon, just a reporting change, not a change in how we deploy.
Simeon Siegel: Perfect. I want to make sure of that. All right. That’s great guys. And best luck for the rest of the year.
Bahram Akradi: Thank you so much.
Operator: Thank you. Our next question is coming from the line of Robbie Ohmes with Bank of America. Please proceed with your question.
Robbie Ohmes: Good morning. Hi Bahram, a couple of questions. The first is, can you give any commentary on kind of how 4Q membership trends are versus expectations? Have you seen any changes or hesitancy related to student loan repayments or anything like that?
Bahram Akradi: How do I see memberships going? So look, we are — we don’t have a huge change of expectation from our membership, and that’s due to the fact that new membership sales in our company really don’t change the outcome of — the net membership is what you’re looking for. You have a little lower attrition, you could sell a few thousand less memberships in a month, but then lower attrition will set — it’s just really your net membership. And right now, we feel like we have been just right on forecast on our targeted dues revenue for the core there. It — to be clear, it isn’t like people are pouring in to sign up. So I don’t know what you guys are seeing from your other services or businesses. It’s moderate. It’s not horrible, it’s not great.
