Viva Leisure Limited (VVA) Earnings Call Transcript

Thank you for standing by, and welcome to the Viva Leisure Limited FY 2025 Results. [Operator Instructions] I would now like to hand over to Mr. Harry Konstantinou, CEO. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us for Viva Leisure's FY 2025 Full Year Results Presentation. I'm joined today by our CFO, Mr. Kym Gallagher. This morning, we released our results announcement and investor presentation to the ASX. We are webcasting live, and this recording will also be available on our investor website later today. The agenda for today will follow a familiar structure. I'll begin with highlights and commentary on our performance. I'll hand over to Kym for the detailed financial review, then return to cover our strategic achievements and outlook. Before we begin, I want to set the tone for today. 2025 has been an outstanding year for Viva Leisure, there are no headwinds in front of us, only the open runway of opportunity. Our business model is predictable, proven and profitable and our track record of meeting and exceeding guidance speaks for itself. This is my 6-year -- sixth results presentation to our shareholders and my 21st year leading this remarkable business. In past presentations, I have often opened with a positive note, usually reminding everyone that what we offer is not discretionary spending but a core part of people's lifestyle. This year, the results speak for themselves. Our performance is not only strong, it is a powerful demonstration of the resilience of our industry and the strength of Viva's strategy. We are firmly embedded in the lifestyle and experienced economy where people continue to prioritize their health and fitness regardless of broader economic conditions. Today, we operate at a scale that delivers advantages others cannot match with a record membership exceeding 620,000 a network approaching 500 locations and a proprietary technology and payment platform in both our brands and external partners. We are positioned for sustained high margin growth well into the future. Our growth is deliberate, disciplined and sustainable, and we see no reason for that trajectory to slow, this slide is the simplest way to show the scale and strength of our platform today. Before we look at the detail, I want to set the scene with an important change in how we present our results going forward. From 2025 onwards, Viva will not be reporting EBITDA on a pre-AASB 16 basis as our primary metric. While we will continue to provide a reconciliation back to pre-AASB 16 numbers for transparency, we will, unless otherwise indicated, refer to EBITDA on a post-AASB 16 basis. This approach is consistent with how our listed peers both within and outside our industry present their results. It provides shareholders with a clearer comparison between Viva Leisure and other listed companies while still allowing you to see the pre-AASB 16 reconciliation, if you wish. Shareholders will be pleased to see that we finished the year with statutory EBITDA of $99.1 million, an increase of 25.6% on the prior corresponding period. This growth reinforces the strength of our business model, the scalability of our platform and the consistent delivery against expectations. Further key highlights worth mentioning is our membership. We now have more than 620,000 members. That is up strongly on last year and cements us as the second largest business operator in the country. Our network now comprises 491 open locations compared to just 29 at IPO in 2019. That's a compound annual growth rate of more than 60% for 6 years. And while size alone is impressive, it's the quality and diversity of our network that really sets us apart, multiple brands, multiple market segments and a technology and payments infrastructure that ties it all together. It's worth saying here, you don't get to these numbers without a model that works and without execution discipline, we have both. For the first time, total revenue has surpassed the $200 million mark, reaching $211.3 million, up 30% over 2024. That is a major milestone for Viva and a clear demonstration of our ability to grow at scale. Earnings per share also increased significantly, up 47.6% to $0.0524, NPAT continues its significant upward trend, finishing at $5.2 million, an increase of 60.9% on the prior corresponding period. Adjusted free cash flow rose 6.8% to $32.6 million. In February, we announced that our strategy had shifted from simply opening more locations to optimizing the network for greater profitability. Although that change came with only 4 months left in the financial year, we still managed to improve free cash. We expect this optimization strategy to really shine through this financial year and especially during 2027. And finally, EBITDA reached $99.1 million, as previously mentioned, or $45.9 million on the pre-AASB 16 basis, an exceptional increase of 29.7% over pcp. These results show both the growth in scale and the increasing efficiency of our operations. Moving to Slide 7. This slide is all about discipline. We reinvested $60.9 million for growth in 2025, more than double last year. That includes $36.9 million in strategic acquisitions and $19.2 million in growth CapEx. Every dollar is deployed with purpose and every acquisition strengthens our network, our member base and importantly, our tech reach. We also returned value to shareholders with a $4.7 million on-market buyback. This balance between reinvestment and returns is a key part of our capital allocation discipline. We often get told that our growth is masked by acquisitions, given we have completed and integrated over 100 acquisitions in the past 6 years. However, this slide makes it clear that organic growth is alive and well at Viva. In 2025, we delivered strong revenue growth from multiple sources, not just acquisitions. Our corporate member base grew organically by more than 8%, with contributions from new greenfield sites and the full year impact of prior year investments and openings. The reality is that acquisitions are 1 of several growth levers for Viva, and we are equally adept at driving organic growth from our existing footprint, as highlighted by those numbers today. The combination of disciplined acquisition plus sustained organic performance is a big part of why our revenue reached $211 million this year, again, up 30% from the previous year. This chart makes 1 thing very clear. We are consistently growing our member base across the network, from just under 300,000 members 3 years ago to more than 620,000 today with strong contributions from both corporate and franchise operations. The scale of this network is enormous. At 621,000 members, Viva touches the lives of almost 3% of Australians over the age of 15. It is a remarkable level of reach for any fitness business, and it underlined our position as a true leader in the market. And here's the key point. Every single 1 of these members pays Viva or Viva franchisee every fortnight. That is the truest reflection of a membership base, committed members, regular transactions and an ongoing relationship. This is a testament to our loyalty -- our loyal brands and how they inspire and the essential role we play in our members' lives. Scale is not just about numbers on a page. It's about the depth of management and Viva's case, the engagement is strong, consistent and growing. Our weekly visits by members now exceeds 1.2 million, take that in for a moment, 1.2 million member visits every single week. This slide is more than just numbers on a map. Since IPO, we have increased our locations sevenfold. The strategic approach here matters. It is not just about opening clubs. It is about opening the right clubs in the right markets. and, in some cases, acquiring and corporatizing franchise sites to strengthen control and margins. We have built a footprint that gives us competitive advantages in procurement, brand presence and data-driven decision-making. It is also a captive membership base, supported by a high-quality location portfolio and brands that lead the market. This combination becomes a powerful opportunity for further deployment of our technology and the introduction of new options for members and franchisees. It is important to note that 60.2% compound annual growth rate we have achieved over the past 6 years. That growth includes nearly 2 years of operational interruptions and another 2 to 3 years of predictions that inflation and interest rates would kill off discretionary spend. The reality could not be further from the truth. Our industry is resilient, our members are loyal, and our growth has been strong and sustained. This is a network that underpins everything else we do from technology deployment to payment processing across brand member offers. With that, I will now hand over to Kym, who will walk you through the next few slides covering our financial results, capital allocation and balance sheet in detail.

Thanks, Harry. Firstly, as Harry has mentioned, this year, we're transitioning from reporting on a pre-AASB 16 basis to a statutory or post-AASB 16 basis. The numbers presented throughout this section will be shown as post-AASB 16, unless otherwise noted. We've also where possible adjusted prior periods to be displayed on a like-for-like basis. As Harry also mentioned, this is another year of very strong growth with revenue, EBITDA and net profit all up substantially on the prior year and at record levels. Importantly, that growth has come from a combination of organic expansion in our existing clubs, a disciplined greenfield rollout and strategic acquisitions that strengthen our market position. We've also seen our high-margin technology payments, licensing and services segment contribute meaningfully to both revenue and future earnings potential. The scale we've achieved since listing is now providing us with the springboard to deliver enhanced products and services to our substantial member base which will drive up average revenue per member. The projected slowdown in rollout of greenfield sites will allow us to concentrate on optimizing our existing network through operational efficiencies while still allowing for significant growth across our franchise and tech divisions. In addition, it creates an opportunity to deleverage through improving cash flows while maintaining sensible debt levels. On Slide 12, the financial snapshot. This slide shows our revenue and EBITDA trajectory since 2020, our first full year as a listed company. On revenue, we've grown from $40.9 million in FY '20 to $211.3 million in FY '25. That's the fivefold increase in just 5 years. representing a compound growth rate of 38.9% per annum. EBITDA has followed a similar path, growing from $15.7 million in FY '20 and to $99.1 million this year and that's a CAGR of 44.5%. These results aren't just about being bigger. They reflect our ability to integrate acquisitions effectively create strong organic growth across our existing base and greenfield type rollouts and manage cost efficiently while continuing to invest in growth initiatives. This slide shows the revenue growth bridge between FY '24 and FY '25. Revenue increased by -- in real dollar terms at $48.7 million or 30% to $211 million. What stands out is that $19.3 million of the increase in Health Clubs revenue was organic growth. That's from clubs that we're already operating at the start of the year, plus greenfield sites to be opened during FY '25. That organic uplift represents the ongoing demand for our brands as well as the benefits of our refurbishment and optimization programs undertaken in prior years. Corporate membership organic growth of 8.49% from existing locations and new greenfield sites demonstrates our underlying business momentum remains very strong even before we layer on the acquisition growth. Acquisitions, new club openings and the continued ramp-up of Viva Pay and other technology revenue streams added the rest of the uplift providing a strong balance of recurring base growth and expansion driven revenue. Breaking down that revenue into segments. Health Clubs sits at $187.5 million and is up 27.1%, so this growth was driven by increased membership and price improvements as well, obviously, from contributions from new sites and acquisitions. The franchise division at $7.9 million, which is down slightly on last year, due to the planned removal of third-party payment rebates as we transition to Viva Pay. This is a short-term debt as the launch of Viva Pay sets us up for much larger long-term gains as we transition the BFS and World Gym businesses across to Viva Pay. Technology, payments, licensing & services is now $14.8 million, up 127.7%, this segment includes our payments platform licensing and various technology and services revenues. It is our highest margin division and is scaling rapidly. It will be a key earnings driver moving forward. The trend here is the diversification of the revenue base toward higher-margin technology-led income streams through both direct and indirect average revenue per member initiatives. Moving on to the profit and loss. As Harry has pointed out a lot of these results already. However, they are worth repeating. Revenue was $211 million, up 30% against prior year. A milestone for us is we've now crossed the $200 million mark. Statutory EBITDA grew 25.6% to $99.1 million after adjustments. And while noted on this page -- not noted on this page, pre-AASB 16 EBITDA was $45.9 million up 29.7%. We expect to drive operational efficiencies moving forward as we tighten our aggressive growth stance, which will drive margins higher. We also grew normalized NPAT to $7.3 million, while statutory NPAT was $5.2 million, up 60.9% on the prior year. If we look at the pre-AASB 16 NPAT, last year, we reported $10.6 million while this is a churn on the slide. And on a like-for-like basis, this year is $12.6 million. so it's up approximately 19% on prior corresponding period. Looking at the balance sheet. The asset base increased significantly as we invested aggressively in acquisitions, strategic investments and greenfield sites. Borrowings increased to $100.5 million, up from $60.6 million, which is quite a large growth number but we predominantly utilized the debt that we had under the new CBA facilities to fund the acquisitions and growth projects. But on that, we currently have no need to draw any additional debt for the foreseeable future. Our new bank facility arrangements include a cash sweep mechanism which means that excess free cash flows above certain leverage thresholds will automatically be paid to reduce debt, which we expect to occur during FY '26. This combined with our strong cash generation capabilities, we expect to see a deleveraging over the coming 12 months. Looking at the cash flows. Cash flows from operations increased by nearly 18% year-on-year, reflecting the strength of our recurring revenue model. As mentioned on the previous slide, we invested heavily at $29.5 million in property, plant and equipment, $30.2 million in acquisitions and $6.6 million in strategic investments, so it was a very heavy capital program across the year. In addition, we aggressively undertook the share buyback program, creating an EPS benefit for our shareholders, and despite this elevated investment maintained a reasonable closing cash balance. The cash position reflects our active deployment of capital for growth, and we believe we now have the scale of Clubs and members infrastructure and capabilities to drive our planned revenue initiatives. This will create operational efficiencies and better cash flow returns in the future. Just a quick note on the share buyback, as mentioned, we undertook a fairly aggressive share buyback program during the year. We acquired around 3.5% of issued capital at what we believe are very attractive valuations relative to the underlying asset value and earnings potential of the business. This program delivered immediate accretive benefits to earnings per share, while demonstrating our confidence in the company's prospects and our commitment to returning value to shareholders. It is worth noting that we executed this program alongside acquisitions, organic growth in site numbers and technology investments demonstrating that our capital allocation framework balances the return of capital to shareholders without compromising our growth agenda. Here's is a more detailed -- on Page 20 detailed analysis of the cash flow. So this breaks down the movement in cash for the year and demonstrates the underlying strength of the cash generative business model. Net receipts from customers increased to $100.3 million, up from $79.7 million, representing a 25.9% increase, operational cash flows of $38.2 million is up 10.4% on last year. Free cash flow before growth CapEx was $32.6 million, up from $30.5 million. This is growth of 6.8%. This is a crucial metric showing our underlying cash generation before discretionary growth investments. Then during the year, we spent $36.9 million on strategic acquisitions that strengthened our market position and expanded our tech opportunities. We invested $19.2 million in growth CapEx which is new clubs refurbishments and technology upgrades. We invested $6.6 million in strategic partnerships that extend our reach and open new revenue channels. And finally, we returned $4.7 million to shareholders through the ongoing on-market buyback. This mix shows that we're not reliant on a single growth lever. We're building a sustainable multi-platform growth strategy. Thank you. I'll now hand back to Harry to cover the outlook and strategic priorities.

Thank you, Kym. Let's now talk about where Viva is today and where we are heading. We are a clear industry leader with a multibrand, multisegment portfolio that allows us to serve the full spectrum of the market from boutique, to big box from corporate-owned to franchise. Our scale is now a competitive advantage in itself, enabling procurement leverage, cross-selling opportunities and the ability to deploy technology and payment solutions across a vast and growing network, we are positioned for long-term growth. This is an important slide because it shows the predictability of our business model and the ability to deliver exactly what we say we will. We exceeded the guidance we issued earlier this year, which we based on quarterly run rate. With the business that grows month after month, we believe a quarterly run rate forecast is the best tool to measure success. For Q4 2025, we guided to $56 million of revenue, and achieved $57 million. We guided to quarterly EBITDA of $12.5 million, we achieved $12.7 million. For reference, that equates to a post-AASB 16 EBITDA of $26.5 million for the quarter. Based on our Q4 run rate performance, if you analyze those numbers, they provide a base case for '26 of $50.8 million. on a pre-AASB 16 basis or $106 million using our new post-AASB 16 reporting approach. That represents a 7% increase in EBITDA as a base case. And why do I call it a base case because our measure of success is net member growth. We do not report how many members we sign up because that is not what matters. What matters is that each and every club, every day has more members than the day before. until it reaches what we consider capacity. That is the true measure of success. Importantly, this $106 million annualized run rate excludes any upside from the maturation of recently opened locations from new clubs we will open, and we have 4 to 5 set to open before Christmas from the upside available through our extensive network of products and services. This is why we can say with confidence, there are no headwinds in front of us only the opportunity. When you look at the numbers, on the previous slide and ask why this performance is sustainable. The answer is here on Slide 23. Viva is now recognized as an industry leader with a multibrand, multisegment portfolio that reaches almost 3% of Australians over 15. We operate in every major segment in this industry from boutique studios to large-format clubs and we do it through a mix of corporate-owned franchise. This diversity gives us resilience through all economic cycles and it gives us multiple growth levers. It means we are not reliant on a single brand segment or geography to deliver results. We also have a proven scalable business model. We have executed over 100 acquisitions in the past 6 years, integrated them seamlessly and driven organic growth on top. That track record is unmatched in our sector. Our capital allocation, we are disciplined, investing in opportunities with the highest returns, where there is -- where that is optimizing existing sites, selective acquisitions or deploying our proprietary technology and payments platform across a growing footprint. And perhaps most importantly, and the message we are making today to our shareholders and investors is we have no headwinds in front of us. Consumer demand for health and fitness continues to grow our brands lead to markets and our technology advantage gives us additional high-margin revenue streams. Our data indicates that our biggest segment is Gen-Z, and as these members age, their children follow their parents' habits and live a healthy lifestyle. This in itself tells us when we look at the data that the next 5 and 10 years are going to be huge. This is why our quarterly run rate guidance is not a ceiling. It is a base from where we can grow. I want to pause here and connect this slide to something we recently released, the Viva story, I urge anyone who has an interest in our industry or the Viva business, to grab themselves a copy from the Viva Leisure website. It really does paint a great picture. We plan to provide an update to the Viva story at the beginning of each calendar year. We have included this slide today to remind shareholders of the scale and reach of our business. This is not just about gyms. It is about a broad integrated range of offerings from membership to transactional products, licensing and strategic investments. We call this Viva Verse. We are not, as part of this results release, going to target any 1 product individually. That is intentional, the real advantage lies in the breadth and diversity of what we offer, an advantage that continues to be unmatched in our industry. We have capitalized well on this breadth in the past. But as a management team, we really see 2026 and 2027 as the years where this will truly take off. The scale we have built, combined with the diversity of our portfolio positions us perfectly to capture that growth. These next 2 years will be about unlocking the full potential of what we have created, expanding cross-selling opportunities rolling our technology at scale and diversifying revenue streams in ways that single brand or single segment operators simply cannot match. An example of this is that we are very close to formal sign-off on a licensing agreement for our proprietary Viva door access solution. Under this agreement, a third-party industry software company with over 1,500 studios and gyms worldwide will license and integrate our door solution into their software, creating ongoing licensing fees and royalties back to Viva. This provides us with a high return, low-risk software and hardware model. When we listed this business in 2019, we referred to ourselves as a technology-focused Health Club Group. At that time many people did not quite understand what we meant, but with the technology and payments business now generating over $14 million in recurring revenue and about to add licensing to that mix, I think it is starting to make sense. In short, the reach and integration you see here are not just impressive, they are strategic. And the most exciting phase of value creation in our view, is still ahead of us. Our health club and gym business is not just what we do or who we are. It is the engine that drives the rest of our high-margin, fast-growing businesses with a captive market that only grows stronger over time. This slide is not just a snapshot of where we are today. It is also a window into the significant long-term potential of the brands we operate. Right now, we have 172 locations already secured for future opening. These are not vague opportunities or wishlist sites. They are real with a signed contract and deposits paid, of these, only 7 are corporate locations, the rest are high value, low capital and low-risk franchise sites, where franchisees have already made a commitment and are actively working to bring these clubs to life. The fact that franchisees are willing to invest their own capital to open 165 of these locations is the strongest possible endorsement of our brands and their performance. Each site once open, creates an immediate and recurring revenue stream for Viva and our part-owned investments without requiring any capital deployment from us. And the benefits do not stop there. Every new location also drives additional revenue from our technology and payments business by default. As the network grows physically, our high-margin scalable revenue streams -- grow alongside. And I'd now like to close with my last slide before going into Q&A. Our strategy is now focused on the big picture. Whilst it is important that we continue to maintain and grow a profitable business, we are targeting a more profitable return from the network we have already built. That means doing more of the same but doing it smarter with an even greater emphasis on margin and value creation. We are also excited about the further technology products we have rolling out through our corporate and extended network in the coming months which will strengthen both revenue and engagement. We have no headwinds in front of us and even when there were this business excelled. Health and fitness is not a discretionary purchase for our members. It is part of their lifestyle, and that resilience is one of the defining strengths of Viva. With more than 620,000 members, 1.2 million visits to our facilities each and every week and a growing club network, we are exceptionally well positioned for 2026 and beyond. When we set targets, we deliver on them. Our track record proves it, and our strategy for the years ahead builds on that same discipline and focus. The years ahead will be about unlocking even greater value from our scale diversity and capability we now have in place. Thank you for your time, and I'd now like to open for questions.

[Operator Instructions] Your first question comes from Nick McGarrigle, Barrenjoey.

Maybe just on the -- to start off with on the tech revenues, they're up close to 130%. Just what the run rate for that is into next year on the kind of extension of Viva Pay, some of the tech -- I guess, trying to get a sense of what that growth might look like into next year given you kind of haven't really leveraged that across the whole franchise network?

Yes. Okay. Thanks for that question. So tech revenue is made up from a few things or TPLS we call it now. Essentially, we charge franchisees for onboarding members onto the platform. Currently, that is just Plus Fitness. World Gym is in transition to start moving on to our platform prior to going to Viva Pay. So as those members come on board, and we haven't finalized the full number but to put an indication on it, once that comes onboard, World Gym signs approximately 15,000 members a month. We will charge somewhere being $5 and $7 to activate those members each month that join on the platform. So once that comes on board, that adds probably close to another $1 million in revenue, which is high-margin revenue. There's no cost associated with that. So that's 1 part of it. Viva Pay for World Gym won't come in until April 2027. So that's the following year. But we all start to generate, as I said, technology fees from onboarding members and using our door access solution, our member online joining and the clubs using our data and analytics platforms. We've also got a couple of other technology platforms to launch in terms of numbers, we're not really comfortable giving those out at the moment. Vending machine network is growing. That falls into that segment as well. We've got close to 150 machines deployed. We've identified some new technologies, smoothie machines that will provide a new service into clubs with no staffing. So we see upside on that plus the actual vending machine that we will continue to grow our digital signage network falls under this. We've previously had 400 screens. We've now got 650 screens in the network and growing, and we're looking at ways of how we deploy that down into the franchise network and share with our franchisees, some of that revenue [ eyeballs ]. We're commercializing our Plus Fitness and Club Lime radio by doing a limited trial of advertising on that. And now as a captive market, as I said, of 1.2 million members that includes, World Gym members, but it's a significant amount of people in clubs listening to our music in the background. So we're pretty excited where that tech revenue is going to go. 2026 will form the basis of it. You'll see an uplift in that the licensing fees I talked about as well on technology will add to that. But 2027 year, once it adds Viva Pay to World Gym, and technically, if we can get BFS onto that by then as well, it's a slightly more complicated approach for them. That in itself is another $5 million or $6 million of margin on that division. Does that all make sense?

Yes. No, that's really helpful. That's good to understand. And I guess there's a comment in the presentation and the outlook commentary around looking for efficiencies across the network as well as focusing on the return on the invested capital and quality over quantity. Can you just give us a sense of what that looks like in practice with the existing network of clubs and within those clubs on the cost base?

Yes. Look, we didn't raise the buzzword of the time at the moment, which is AI. But like any other business in this, we're using a lot of that technology in the back end. And as that rolls out into the front of house type things, it creates opportunities for cost savings for our business but also revenue opportunities. We have some pretty cool features that we'll launch in our Club Lime app. That we're aiming to have behind the paywall at some point. And as that rolls out and has access to 600,000 members, it becomes pretty significant. So -- I lost my train of thoughts.

In other initiatives, Nick as well. We're looking at, I guess, optimizing the network of clubs, the corporate clubs as well. As leases roll up, we tend to historically and moving into the future, we'll look at whether they're contributing to the network at the level that we expect them to if those are borderline line and we've shown marketing dollars and resources at it, and they're not quite performing the way that we should. We're probably going to just close them. And then instead concentrate our resources to those that are mid-level to high-performing clubs such that when we get less cost, the margin will go up because we're generating more membership, more revenues in the high-performing clubs, and items like rent will just disappear because we'll close the clubs. So there's that level of optimization as well.

Yes. And we did call out in the appendix where we said on the Health Clubs side of things, we forecasting a net -- net 0 growth on number of clubs because they'll optimize out remembering that when we listed, we had some strong growth in 2020, 2021. Those leases come up for renewal now. So they've become a decision point because most leases for us are 5 years or 10 years. So there are leases coming up and they've become a decision point for us of whether we optimize them out of the network, merge them, renew them, that sort of thing, is what we're referring to.

So the kind of 201 corporate club count now is potentially kind of only up modestly with some of the rollouts you've got earmarked offset by closures.

Yes. We're still going through those numbers. We actually sit at 203 today, and we have 4 new clubs to open before Christmas. So by Christmas, we'll be 207 less, whatever else we expect to drop off. And so look, over the course of the year, I don't expect that like previous years to be adding 25 I think somewhere between 5 and 10. And then depending on when any opportunities come for any drop-offs, we'll look at those if they make financial sense.

And then maybe on M&A and franchise buybacks then within the corporate club network that you're kind of pushing the price on that as well?

On franchise buybacks. The thing is we have first right of refusal. So generally, if it's a nice site, we'll buy it. It just depends on the broader market. So we can always push back and say to a franchisee, yes, go to the market and try and sell it. And if they get a really good price, we'll introduce a new franchise into the network that has benefits for us as well. So we'll look at it. We're pretty happy. I think when we bought Plus Fitness, we said we'd be happy with 5% of the network, which at the time would have been about owning about 10 clubs. We now own 33-plus fitnesses. So we've exceeded that. I don't know how much more we want to do because the approach now with the capital-light model and 170 franchises across those 3 brands to grow, we'll just sit back and capitalize on the technology and payments. That platform is built, it scales, it works and provides high margin. That's probably more our focus than getting the clubs the corporate clubs to 250 or something.

Yes. Fair enough. I mean I guess that's good because it likely leads if you kind of exclude growth CapEx where you are expanding, it obviously means free cash flow starts to improve when you're harvesting a higher return on invested capital on that -- on the network.

Absolutely, that is the target.

Your next question comes from James Bisinella from Unified Capital Partners. Please go ahead.