Good morning, and thank you for joining today's Planet Fitness Q4 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Stacey Caravella, Vice President, Investor Relations, for opening remarks. Please go ahead.

Thank you, operator, and good morning, everyone. Speaking on today's call will be Planet Fitness Chief Executive Officer, Colleen Keating; and Chief Financial Officer, Jay Stasz. They will be available for questions during the Q&A session following the prepared remarks. . Today's call is being webcast live and recorded for replay. Before I turn the call over to Colleen, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during the call. Our release can be found on our investor website along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Now I will turn the call over to Colleen.

Thank you, Stacey, and thank you, everyone, for joining us for the Planet Fitness Fourth Quarter Earnings Call. Our strong 2025 performance is a direct result of our discipline and focus on our 4 strategic imperatives. I want to personally thank our franchisees and our team members. . Their passion is what fuels this brand. We ended the year with approximately 20.8 million members and a global footprint of nearly 2,900 clubs. Reinforcing the quality of our member experience and our compelling value proposition. Anyone can get a great workout at Planet Fitness for an incredible value. Our financial performance was strong across the board for the year as well. Sam's Club sales grew 6.7%. Revenue increased 12% and adjusted EBITDA 13% and we delivered 19% growth in adjusted diluted EPS. Importantly, we opened 181 new clubs and added 1.1 million net new members in 2025. This growth occurred during the first full year of our new classic card membership does proving that the value of our brand remains unique in the industry. The progress we made on both our top line and new club growth is evidence of our powerful scale and reach, and the strength of our team. Our scale provides a foundation to introduce our brand to even more people looking to improve their physical and mental health globally. There was no better way to wrap up the strong year than by taking center stage as the presenting sponsor of Dick Clark's New Year's Rockin Eve as we've done for the past decade. With 20,000 Purple Hats blanketing Times Square, we ensured Planet Fitness was the brand's millions of people saw as they set their 2026 wellness goals. As we continue to grow our international presence, we see New Year's Rockin Eve as an opportunity to put…

Thanks, Colleen. Our financial foundation remains exceptionally strong. I'd like to reiterate, we're extremely proud of what we delivered in 2025. Our highly franchised asset-light model continues to generate significant predictable cash flow. This has allowed us to return nearly $800 million to shareholders through buybacks over the last 2 years while also funding strategic investments for future growth. Now to our fourth quarter results. All of my comments regarding our quarter performance will be comparing Q4 of 2025 to Q4 of 2024, unless otherwise noted. We opened 104 new clubs compared to 86. We completed 96 new club placements this quarter compared to 77 last year. We delivered system-wide same club sales growth of 5.7% and Franchisees same club sales increased 5.6% and corporate same club sales increased 6%. Approximately 80% of our fourth quarter comp increase was driven by rate growth, with the balance being net membership growth. Black Card penetration was 66.5% at the end of the quarter, an all-time high and an increase of 260 basis points from the prior year. Our ending fourth quarter member count of approximately $20.8 million was in line with our expectations. For the fourth quarter, total revenue was $376.3 million compared to $340.5 million. The increase was driven by revenue growth across all 3 segments, including a 9.6% increase in the franchise segment, a 7.4% increase in the corporate-owned club segment and a 15.3% increase in the Equipment segment. The increase in our Equipment segment revenue was driven by higher revenue from equipment sales to franchisee-owned clubs. For the quarter, replacement equipment accounted for approximately 60% of total equipment revenue compared to 58%. For the fourth quarter, the average royalty rate was 6.7%, flat to the prior year. Our cost of revenue, which relates to the cost of equipment sales…

[Operator Instructions] Your first question comes from the line of Randy Konik with Jefferies.

I guess, Jay, a question for you is when you look at the '26 guide and you think about -- you just reiterated your 3-year growth algo that you gave at the Analyst Day. Give us some perspective on what does that mean for the 2 out years in terms of shaping the revenue growth unit expansion and EBITDA dollar growth? How are we supposed to think about that as we think further from '26 into '27 and '28.

Randy, thanks for the question. And as we said, right, we knew that this year would represent the lowest growth year in the 3-year range because of the reequipped cycle and because of the sale of the California clubs. So those impacts, if we think about that on the year-over-year growth for this year is about a 300 basis point impact to top line and about a 200 basis point slightly north of that on the EBITDA. So obviously, that was contemplated and known. Also included in our guidance this year are, like we mentioned, just some transitory to a much lesser extent, transitory headwinds and related to the weather impact in joints, which we can talk more about as well as a slight elevation in attrition versus our expectations that we saw in January, which is now normalized. But to your point, right, we have reiterated our commitment to the 3-year algorithm, and we expect to get back to those targets that we laid out both for revenue and EBITDA over the 3-year period. And to your point. So there's a bit of a step-up in the out years. I think you guys can probably all calculate and do the math. We expected, and this is not dissimilar to what we rolled out with our 3-year auto at Investor Day. We didn't indicate that the Algo was going to be an annual growth rate. But certainly, the strategic imperatives, we see the traction in their building. And the beauty of this model is that once we start to continue to drive revenue and net member growth, there's significant flow-through to the bottom line. So we see increases in both year 2 and year 3 of that growth and to get back to the targets we laid out.

Got it. And then since you brought it up, can we then follow up with starting to get a little bit more granular about the month of January then?

Yes. So in terms of January, a couple of points that I'll talk about. On a -- from a joint standpoint, we saw nice healthy joint trends leading in -- for the first few weeks of January, leading into the storm that started late in January. And then as we work through that storm, we had a significant impact across many of our markets, about 2,000 clubs based on our data had some form of impact, and we saw a marked difference in the relative join volumes during the storm period, the storms period in late January. And then since that time, for the markets that were impacted. We've seen a nice rebound, and then we've seen some very healthy join rates related to promotions we've run in February. So I think those things are temporary in nature. Obviously, with the subscription model, a join that happens earlier in the year is more economically impactful and beneficial to join that happens later in the year. And so we've reflected that as part of this guidance, and certainly, the impact is much less than the other impacts that we've discussed. And then from an attrition standpoint, slight elevation in January, right? This was the first year of a high-volume period with the ability to manage your membership with our messaging around cancel anytime. So maybe in January, it's more top of mind just like fitnesses. So we have made some tweaks to our messaging in our digital platform around cancellation. And we have seen that the attrition rate has come in line in February with our expectations.

Your next question comes from the line of Simeon Siegel with Guggenheim Securities.

So Jay, just for the guidance, how are you thinking about Black Card penetration and then price versus member growth embedded within those revenues? And then just because we're talking about January, just I guess, Colleen, we've been talking about smoothing out the seasonality of your joints. So how do you think about the significance of a challenging, whether January now for plan if fitness versus maybe how we would have thought about it historically.

Yes. So I can start with that. I mean, obviously, from a joint standpoint, right, we've talked about -- in the past, I think, historically, they talked about 60% or so of joins coming in the first quarter. Obviously, in the past couple of years, it's been higher than that. we've talked about consistently the ability to get net member growth across several quarters. And I'll let Colleen speak to it more -- we've got lots of things that we can do, and we're seeing traction on the strategic imperatives to drive joins. In terms of your question -- On Black Card penetration, I mean, we are seeing in the fourth quarter, we continue to see highest ever Black Card penetration of 66.5%. So that is a benefit to rate. As we think about the guide and the comp, we're expecting about a 75-25 split, 75% being rate, 25% being volume or membership growth.

Yes. And I'll just maybe build a little bit on what you said about the January joins. And Simeon, as you've seen we've been successfully running promotions and experiencing net member growth in quarters outside of Q1. This past year, Q4, we had net member growth prior year in the back half, we also had net member growth. So you'll continue to see us deploy marketing in quarters outside of the first quarter. And I think a couple of things important to note, coming through 2025, with 1.1 million net new members, that was is a 10% increase on net new members versus the prior year 2024, and it was our first full year of the elevated classic card pricing as well as the first year that we rolled out nationwide online member management. So that, coupled with, as Jay mentioned, we were seeing strong joint trends coming through January prior to the storm impact. I think all of those things together give us real confidence in the momentum that we're seeing in the business.

Your next question comes from the line of Max Rakhlenko with TD Cowen.

So first, just on the lower EBITDA and the EPS guide for 2026, a you maybe talk about the shape of the year and how we should think about both 4 1H versus 2H?

Yes, Max, this is Jay, and I will speak to that. When we think about our comp guide of the 4 to 5. A couple of things to point out, right? We are going to be lapping the nationwide rollout of member management in Q2. So when we think about the comps, we think about lower comps in the first half, and we think about higher comps in the back half as a result of that. Also, of course, as we've called out with the equipment revenue that is notoriously backloaded. I think last year, we had 57% of our openings in the fourth quarter. This year, I would tell you, it's around that, it might be a few points higher, so maybe closer to 60%. And then otherwise, I think if you model consistently otherwise, from an equipment standpoint. And then obviously, we're going to have an increase this year in the NAF revenue and I think Brian and Paul and Ellie gave you a ballpark amount for that in -- on the Investor Day. And then otherwise, yes, it's pretty -- the comps are going to be the drivers. Obviously, we don't guide to membership. We've talked a little bit about the cadence of our membership and our ability to add members throughout the course of the year. We're probably not going to get more granular on that. But I think that should help you shape and form the model.

Just 2 quick follow-ups. Just what about on the margin side? Anything that we should think about first half versus second half because the guide does embed obviously some margin pressure. And you touched on some of the drivers. So how should we think about the year progressing?

And Max, you're talking about EBITDA margin standpoint?

Right.

Yes. So I think if you -- I think when you think about it, we've got to look at it ex NAF. We're expecting to get significant margin leverage on an ex NAF basis. Even with NAV because that is obviously impactful to the EBITDA margin, we're expecting to be pretty consistent year-over-year. So I think as we think about our guidance, and the way we've approached this. We think the guidance is appropriately given some of the puts and takes we've talked about. And I think what that helps us do has really set our expense structure below that. I mean, certainly, we're going to do all we can to continue to work hard and drive that top line and drive joins. But we've set our expense structure with this. And if you think about where we've got leverage in the model, it's really on the SG&A.

Got it. That's helpful. And then, Colleen, what's the latest thinking around the timing of the Black Card price increase? And how do you think that it will change the complexion of the comp build as well as the Black Card mix? And then is it already embedded in the guide? Or are we going to get an update once you roll out the Black Card price increase?

Yes. Great question. So we indicated that we would roll out a card -- the Black Card price increase after our peak join season. For competitive reasons, we're not being overly specific, but you know our business well, and you know when our peak join season is. And I think where we took the classic card price increase 2 years ago is kind of a directional indication Q3 obviously is our lower join quarter. So that will give you an indication of when we're anticipating to roll that out. And as we've said, as we've increased our Black Card penetration over the past couple of years. We know we have gotten some organic rate lift out of the increased penetration, and we expect to continue to get -- to be able to take impact from pricing in the comp from the Black Card price lift. And I think we've given directionally anticipate in the comp about 75%-ish coming from rate 25-ish coming from volume.

Awesome. Best regards the rest of the quarter.

Your next question comes from the line of Joe Altobello with Raymond James.

First question on attrition rates. You mentioned them a couple of times this morning. I'm curious, back when you implemented click to cancel, are they back to where you thought they'd be in February?

Joe, this is Jay, and I'll start with that. I mean, yes, from an expectation standpoint, they are back in line with our expectations for February. And like we've talked about historically, while there was an elevation after click to cancel last year, still those rates have been within historical norms. And that's when we think about the full year and how we expected, we would expect the attrition rate to be within the historical norms. And again, we're anniversary-ing the national rollout of click to cancel in Q2 of this year. And again, from a -- from a stepping back perspective, right, there's a lot of reasons why this is the right approach strategically for a member experience. We're continuing to see an increase in our conversion rates that are up 6% in the digital joint flow. Obviously, this is still a focus of the FTC and at the state level. So we think this is absolutely the right direction in place to be and the rate has gotten back in line with our expectations.

And I think important to also point out that for the full year 2025, we were still well within historical norms on an annualized basis. And we've shared, it's been a 3 handle average attrition rate on an annualized basis, and that's where we landed in 2025 as well. .

That's helpful.

And just also add to that. We also are continuing to see of our joins mid-30% of our joins are rejoins. So we know that when we're treating our members well and giving them the opportunity to manage their membership, they're coming back to us. And I think Jay also indicated that in the joint flow, we've seen about a 6% increase in conversion in the join flow since noting the ability to manage your membership in the joint flow as well.

Got it. And just to shift gears to interest expense. This is probably the biggest delta, at least from my model, I was not expecting a $29 million increase year-over-year. So maybe could you -- I understand the debt levels are up because of the upsized refi and you've got the buyback here in '26 but still can get the '29 of incremental interest expense.

Yes, Joe, and we can take it offline if needed. But absolutely, it's just a function of the blend -- we were giving up a coupon in the 3s and the coupon on the new tranche of debt is about 5.4%. So it includes the $400 million that was refied plus the $350 million incremental that allowed us to do the ASR. So that's probably one component, the only other component. Obviously, there's an interest income component embedded in that, but you should be able to get pretty close.

Your next question comes from the line of Chris O'Cull with Stifel Financial Corporation.

Colleen, I'm trying to understand the 4% to 5% comp guide. The company should have becoming benefit of the Black Card pricing, a 25% increase, I think, in media impressions from the additional ad dollars and then just the residual benefit of the classic card pricing. So I mean, in the fourth quarter, comps were up almost 6%. So can you help us understand why comps are expected to slow? I mean is this conservatism or the higher cancellation rate? I'm just trying to understand how to think about this guidance?

Yes, you want to start or?

Yes. Chris, this is Jay, and I can start with that. I mean a couple of things, right? You've got a -- I mean, this is a subscription model. And when we think about our comp base, obviously, I mean one small factor is the fact that stores enter the comp base after the 13th month. So when we opened 150 clubs in '24, those are going to largely impact '26, and that was a low club opening year compared like if you think about the 181 that we just opened, which will impact '27 really. So that's a component of it. And then the other piece is just we've got a large installed base of clubs that generate a ton of cash flow. So even to your point, with the lift that we will see from rate -- it just takes a lot to move that needle from a comp standpoint. Obviously, embedded in that comp guide is the fact that we've had a little bit higher attrition than typically, certainly year-over-year since we did the national rollout. And again, we would expect that to moderate as we lap that in Q2.

I was just going to say I could build on that a little bit. I do think we're back in -- our openings are back-end loaded. We had a very, very strong unit opening year for 2025. And more than 20% lift in openings in '25 versus '24. However, as Jay said, those clubs will come into the comp base on the 13th draft and because the openings were so back-end loaded, we had over 100 clubs opened in the fourth quarter. We'll start to experience the benefit of those in the comp base much later in the year this year. And as Jay mentioned, we're also back-end loaded in 2024 openings, but it was a significantly lower opening year with only 150 clubs opening and again, back-end loaded. So those things certainly factored into our guide. And we also were coming up on the second anniversary of the classic card price lift that we took in June of 2024. So the most pronounced impact of that pricing has been experienced. And then we've -- we do have the Black Card price lift modeled into our guidance. But as you know, we're going to take that after the peak joint season. So we'll be impactful, but not as impactful if we were taking it on the peak join season.

Okay. And then just a question on the row partnership. Are there any plans to jointly market the benefit to consumers? And is the is a partnership designed to encourage membership retention, meaning is the perks discount a onetime upfront benefit? Or is it structured to be an ongoing benefit?

Yes. So the Perks partnership, we just launched in late Q4 and the intent really is to give -- it's mutually beneficial, right, to give row the opportunity to promote in front of 20.8 million fitness-minded members and at the same time, give our members an added benefit through discounts and the ability to convert with Row as a complement to their commitment to health and wellness. We've done -- we've seen a number of studies on the GLP-1 impact in our business. One in particular that one of our franchisees commissioned and shared with us indicated that 50% of people who take a GLP-1 consider a gym membership. Those are very, very compelling market -- customer market indicators. So this is our first attempt to really partner with a provider, a GLP-1 provider and make the offering available to our members. And as I said, we've seen quite high cut-through and quite high conversion, but early days. We think there's more opportunity in our partnership with Row. But again, for competitive reasons, we won't speak to what our go-forward intentions are other than to say both we and Row have been pleased with the early results from the Perks farmers.

Your next question comes from the line of Rahul Krotthapalli with JPMorgan.

Yes. I just wanted to revisit the comp waterfall and the member joined waterfall for the clubs. Can you remind us how this currently tracks and especially for the classes of the clubs that opened in the last 2 years and then also that entered the comp base, curious to see how this is tracking after the white card pricing. And then as a follow-up, do you expect to see any tailwinds if rest of the industry on your competition is for to click to cancel at some point? Any color there would be helpful.

So Rahul, this is Jay. And in regards to the comp trends, you broke up a little bit on the question. But right we talk about when those new clubs enter in the first year of comp, they typically are comping in the 40-plus percent range. Year 2 was in the low to mid-teens. Year 3, generally speaking, is in mid-single digits. And then beyond that, low to mid-single digits, if that -- I think that was your question. And then what was the second part of the question?

Click to cancel to the industry and its impact on us.

Yes. So I mean, I'll start and Colin may chime in. But again, I think strategically, we think this is the right thing to do from a member experience standpoint and from a derisking the business standpoint. And from -- we are seeing lift in our digital conversions with the ability to cancel anytime. So we think that sets us up well strategically and going forward to have an advantage.

I'll just say, again, we're -- as Jay said, focused on doing the right thing by our members. We're seeing more and more municipalities whether at the state level or local municipal level, focused on giving consumers and subscription models, the ability to manage their subscription or manage their membership. So we believe we did the right thing and also derisk our business by kind of getting ahead of that. And at the end of the day, I touched on the mid-30% rejoin rate. We think that's probably the biggest impact, favorable impact is when we've empowered our members to manage their membership. They feel good about their relationship with us. And the top 2 reasons why we see people cite a cancellation reason -- are they moving or lack of time. So it's nothing to do with experience or lack of desire. And when they consider rejoining a gym or a club, a large proportion of them come back to Planet Fitness.

Your next question comes from the line of Jonathan Komp with Baird.

Could you share a little bit more on the joint trends that you're seeing? And do you see opportunity to make up for some of the pockets of weakness that you mentioned and still add close to the number of members that you added in 2025. Is there any reason that that's not realistic at this stage?

I'll start maybe and just say we were seeing very strong joint trends coming through the tail end of 2024 and coming -- tail end of 2025 and coming into 2026 prior to the weather impact. So that gives us a lot of confidence around the fact that we've got great secular tailwinds, and people are more fitness-minded than ever before. So to your point, John, we're confident in our ability to drive strong member growth through the balance of the year. And again, I'll say the results that we had in 2025 and which were a 10% lift in net member growth over the prior year despite the fact that we rolled out online member management and had full year impact of the classic card price lift. I think the other thing is as our -- we look at consumer data in addition to our lapsed members and the strong results we're seeing with rejoins. As we shared at the Investor Day, active adults in the U.S. likely to pay is somewhere in the neighborhood of 50 million to 60 million people and fitness paying members who could have the opportunity to convert to Planet also in the 60 million people. So the opportunity to continue to drive joints, have our marketing reach this broad fitness-minded audience is something that we feel really confident about.

Okay. Great. And then, Jay, one follow-up on the full year outlook for adjusted EBITDA. You guided to 10% growth. I think it explained 200 basis points of the difference versus the mid-teens 3-year average that you highlighted in November. Could you just maybe bridge the gap, the remainder of the difference there, the other 300 basis points or maybe 200 to 300 basis points. Are there any other investments upfront hitting the first year or opportunities the next 2 years after to drive greater leverage? Just any color there.

Yes, John, for sure. So again, we knew about the headwinds coming in. We knew that this year would be the lowest growth year in our 3-year algo, the intent was not that, that 3-year algo was an annual growth rate for each year. So there's a ton of good things happening like Colleen mentioned in her prepared remarks around the strategic imperatives. And those things will build and gain traction and gain momentum. We talk about the first 100 days. We talk about the Black Card spa amenities. We talked about improving the app in terms of training. So there's lots of good things going on. Obviously, we're focused on joins. We're focused on retention. So as we think about that, the power of this model is that -- and again, we think the guidance is appropriate. That has helped us set the expense structure in a very good way. So once we start to have this flywheel continue to compound, which we expect in the future years there's significant opportunity from a flow-through and growth perspective. I might have just -- I might add to that, too, just the momentum we're seeing with the younger consumer as well. And as we think about the potential for lifetime value, high school summer pass, we were just shy of million participants last year, $3.7 million this year and an increased conversion rate to paying members at the conclusion of that. So I think lots of strong momentum from a joint volume. And the fact that one of the big drivers is obviously unit openings, and we came off an incredibly strong year of unit openings in 2025 with more than 20% lift in unit openings year-on-year, '25 versus '24.

Your next question comes from the line of Sharon Zackfia with William Blair. Please go ahead.

I think one of the big wildcards you had entering this year was the increase to the [indiscernible] fund. I know there's been a lot of -- it sounds like noise in the first couple of months of the quarter for various reasons. But how do you think about that wild card in terms of increased impressions and kind of more shots on goal as we go throughout the rest of the year as it relates to member growth.

So I'll start and then, Jay, if you want to chime in, you're welcome to. So you're right in that we had the 1% shift from the last coming into the NAV for 2026. However, we asked our franchisees to keep their last spending whole for Q1 and we're anticipating that shift to have the most impact in Qs 2, 3 and 4. And some of the new capabilities that, that shift in dollars to the NAV. Some of the new capabilities that will enable are things like the dynamic content optimization and the enhanced AI-enabled CRM as well as helping to fund the predictive churn model that we've got under development and we'll have in pilot in the fairly near term. So it's funding the building of some of those capabilities that will make our marketing even more effective over the longer term. When you think about DCO, dynamic content optimization or dynamic creative optimization, it will enable us to customize our marketing messaging and better tailor it to the consumer that we're attempting to reach based on kind of the shopping behavior that we see from that consumer and the same with AI-enabled CRM, it will give us greater insights into consumers and consumer motivation and enable us to be more precise in how we target those prospective customers. Particularly as we're looking to reach those active likely to pay or fitness paying members that are using other brands or other modalities.

And Colleen, how do we think about your use of $1 down? I know it's up a bit year-over-year through February. Is that something that is more of a lever that you'll use as well after you take the Black Card price increase to kind of bolster the classic card membership joins. . So we've talked a little bit about the advertising that we want a compelling message that showcases the value of Planet Fitness and then that you can get strong at Planet Fitness. So we called out kind of the YPF why Planet Fitness messaging. And then we use an offer as a compelling kind of reason to join now. So the brand building is why Planet Fitness and then a compelling financial offer is kind of Why Planet Fitness Now or the call to action to drive joints and conversions within a specific time line. So we'll continue to use a balance of brand building messaging as well as landing on a call to action that may include a financial inducement.

Your next question comes from the line of Xian Sew with BNP Paribas.

I wanted to follow up about the 30% or 30% rejoin rate. Can you maybe talk about the time between maybe members are leaving the system and coming back? Is there any as that time away from the system getting shorter as you're seeing kind of more of this trend? Curious to hear about that.

We continue to market to former members on a very consistent basis. We're continuing to test different time lines. So as for example, and again, for competitive reasons, I won't be super specific. But we used to perhaps wait a little bit longer before we would come back to them with a rejoin offer. We're testing marketing that approaches them during a narrower lapsed period and again, evaluating the effectiveness of each of the different marketing offers to our former lapsed members. I think -- the most important thing that we are seeing is this increase in rejoin rate. And it's really in the mid-30s. I think we finished the quarter 34.5%? Am I right?

34.8%

34.8% for Q4 rejoin rate. So it's really solidly mid-30s, slightly more than 1/3 of our joins lapsed members returning to our system. .

Okay. And then maybe just on the GLP-1s. Is there any other way to think about what you're seeing so far? I know it's early days, but -- are you starting to see members on GLP-1 join the system? I know the roars, but maybe just kind of what you're seeing so far in terms of the GLP-1 member trends and what the potential could be?

Yes. So again, we don't -- while we don't track specifically the proportion of our members on GLP-1s, given the size of our member population and we believe it's representative of kind of the nationwide utilization, which is roughly about 13% today. I think importantly, when you think about a GLP-1 user and the fact that they're embarking on a journey of health and wellness for themselves, and perhaps we're not a gym member before, might be a first-time gym goer. And we know that [ gymtimidation ] is real. We feel like for the GLP-1 use our brand, Planet Fitness. We are perfectly positioned to meet that customer and support them as they look to combat loss of muscle mass with strength training and also being an environment that's welcoming and without intimidation, judgment free as they embark on their fitness journey. So we see this as an opportunity for us to continue to expand our reach.

Your next question comes from the line of Stephen Grambling with Morgan Stanley.

Just wanted to go back to kind of marrying up the 26 guide versus the longer-term guide, but actually focus more on cash and specifically, CapEx, it looks like you've got that growing are expected to grow 10% to 15% this year. Last year was kind of in a similar range. I know you mentioned this is more around corporate-owned clubs. So is that something that we should be thinking could be front-loaded in that? Or should we be thinking that there's a consistent kind of growth there? And any thoughts around potentially selling additional corporate-owned properties to close?

Yes. So I can start with that. The CapEx, I think, was a little bit lower in the last year, maybe around 6% growth. So to your point, we're maybe always a little conservative in the way we think about that CapEx and that -- the driver of that are a couple of things. It is our corporate-owned clubs. Of course, we've got the new clubs. And then this year, we are undertaking a fair amount of relocations and remodels are at least planned. Also, from a modeling standpoint, obviously, we've talked about Spain and recycling that capital and getting that in the hands of a franchisee to develop that. But we have, from a CapEx standpoint, modeled continued development in Spain on our balance sheet this year. So I think that rate of growth is a reasonable way to think about it in the model going forward. We will continue to build cash throughout the model. And of course, we've talked about continuing to invest in buybacks to return value to shareholders. And in terms of recycling capital and looking at other corporate clubs, I mean, we're always going to look at opportunities and options as they come up. We're right around the 90%, 10% split between franchise and corporate owned and we think in this business. That's a good balance, especially given the 4-wall profitability.

Yes. I think it's important to say we are out to market or we've engaged the banker to go to market for Spain. Would love to bring in a great franchise partner to help us accelerate growth in Spain because those clubs are performing very well and seeing ramps in a new market like Spain that are akin to our new club member ramps that we see domestically. And then just on the California clubs, I think it's important to note, that was a bit of a geographic outlier for us. This was an efficiency play as well as the opportunity to put that market in the hands of a well-capitalized franchisee who had a good operational infrastructure on the West Coast because majority of our corporate clubs are on the East, Northeast, Southeast. So this was an efficiency play as well as an opportunity to recycle capital with that sale.

There are no further questions at this time. I would now like to turn the call back to Colleen Keating, CEO, for closing remarks. Go ahead.

Thank you. And thank you for all the thoughtful questions. In closing, I'll just reiterate our performance in 2025 demonstrates the immense power of our model. We remain laser focused on our 4 strategic imperatives, which do serve as the foundation for our next chapter of growth and our unwavering commitment to delivering long-term shareholder value. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.