Owen Rickert

Owen Rickert asked for a deeper dive into the performance of the 35-person field operations team, inquiring about their tactics and areas where they are assisting franchisees.

Answer

CEO Mike Nuzzo explained that the 35-person field operations team has recently been deployed and trained, focusing on helping franchisees drive sales, improve conversion, manage initial appointments, and follow up on leads. For new studios, they assist with the pre-sale process. The team also targets underperforming studios for comprehensive assessments and coaching. Mike Nuzzo noted that they have just started, and initial feedback from franchisees has been positive, with expectations for them to also aid in implementing new initiatives like pricing changes.

An associate for Owen Rickert asked if the company was observing any changes in member churn or retention patterns following Q1 promotions as trial members converted to full memberships.

Answer

CFO John Meloun responded that there have been no shifts in member cancellation or freeze trends outside of normal seasonality. He reiterated that Q2 and Q3 are typically slower due to summer vacations and that no off-trend shifts in memberships have been observed.

Owen Rickert requested more detail on the strategic pillar of becoming a data-driven company, including the new CTO's role and the data warehouse initiative.

Answer

CFO John Meloun described the initiative as a 'game changer,' moving the company from being 'spreadsheet-driven' to utilizing a central data lake house. This will power real-time dashboards for finance and operations, allowing field teams to access franchisee performance data remotely. He noted that live dashboards are expected to be in use by the next earnings call.

Owen Rickert inquired about the expected cadence of organic growth throughout 2026, particularly given the board's confidence signaled by the $25 million share repurchase program. He also asked how the company plans to balance share buybacks with reinvestment in marketing and innovation to accelerate growth in core categories.

Answer

Carla Vernón, CEO, highlighted confidence from Q4's consumption momentum (north of 3.5%), strong performance in wipes and personal care, and a robust innovation lineup. She mentioned new products shipping in Q1 and entry into the kid personal care aisle. Curtiss Bruce, CFO, added that the 4%-6% organic revenue growth guidance is confident, noting that organic growth will show sequential improvement after lapping Q1 2025 tariff inventory build. Regarding capital allocation, Curtiss Bruce, CFO, emphasized the inaugural buyback as a milestone reflecting strong cash position ($90M cash, zero debt) and confidence in the transformation. He stated the company will prioritize investment in growth, maintain liquidity, and balance this with returning value to shareholders, viewing the stock as undervalued.

Owen Rickert asked about the expected cadence of organic growth throughout 2026, especially in light of the $25 million share repurchase program signaling board confidence, and how the company plans to balance buybacks with reinvestment in marketing and innovation given its strong cash position.

Answer

CEO Carla Vernón highlighted strong momentum from Q4 2025, driven by wipes and personal care, innovation, supply chain improvements, and SG&A rightsizing. CFO Curtiss Bruce expressed confidence in achieving 4-6% organic revenue growth for 2026, with sequential improvement expected after Q1. Regarding capital allocation, Mr. Bruce emphasized the buyback as a milestone reflecting strong execution and cash generation, stating the company will prioritize investment in growth, maintain liquidity, and opportunistically return value to shareholders.

Owen Rickert from Northland Capital Markets inquired about opportunities for incremental shelf space improvement or new category placements with specific retail partners, noting the progress made with the wipes category.

Answer

CEO Carla Vernón stated that the company is still in less than 50% of relevant stores compared to peers, indicating significant room for growth. She highlighted an 11% distribution growth in the food, specialty, and drug channels, providing specific examples such as launching new SKUs at Whole Foods, becoming the exclusive diaper brand at Sprouts, and gaining distribution for flushable wipes at H-E-B. She also mentioned new placement in the travel and trial section at Target.

Owen Rickert asked how the company balances promotional intensity between retail and digital channels while pursuing margin expansion. He also inquired about the progress of shifting consumers from the direct-to-consumer (DTC) website to retail partners like Amazon.

Answer

CEO Carla Vernon explained that the company's strategy is not to push consumers to a specific channel but to ensure product availability wherever they choose to shop, noting that new distribution is highly incremental. She clarified that honest.com will remain an active channel for information and transactions, but the company is simply exiting the fulfillment and shipping component of the business, which is not expected to be a dramatic shift for the consumer experience.

Owen Rickert of Northland Capital Markets inquired about the progression of relationships with key retailers like Target and Walmart, asking about any shifts in shelf space or promotional activity planned for 2025.

Answer

CEO Carla Vernon affirmed that relationships with key retailers are strong and that business performance is balanced across them. She highlighted that consumption was up at Target, Amazon, and Walmart for both Q4 and the full year 2024. Vernon emphasized that Honest plays a crucial role for these partners in attracting high-value consumers both in-store and online, reinforcing the brand's strategic importance.

Owen Rickert from Northland Capital Markets inquired about The Honest Company's strategy and penetration in the dollar store channel and asked for more details on successful marketing initiatives from the quarter.

Answer

CEO Carla Vernon stated that while Honest currently has no distribution in the dollar store channel, it represents a compelling future opportunity. She highlighted that overall distribution grew 4% to 50,000 retail doors, with strong velocity growth of 5%. Vernon also detailed marketing successes, including strong performance during retailer events like Amazon Prime Day and the effective 'Skin to Skin' campaign, which reinforced the brand's sensitive-skin benefits across the portfolio.

Owen Rickert requested an update on MIORA's performance, including the number of operating clubs, member adoption, visits, and its ramp throughout 2026 and 2027. He also asked about the performance of LT Health, the supplement business, across in-club and digital channels, and what to monitor for 2026.

Answer

Erik Weaver, Executive Vice President and CFO, stated that 7-8 MIORA locations are now open and ramping at expectations. Bahram Akradi, Founder, Chairman, and CEO, added that fully opened MIORA locations are ramping faster than original models, and the program is planned for future clubs, expected to be in every market. For LT Health, Bahram Akradi noted the 2026 growth strategy is primarily in clubs, focusing on member visibility and product quality, while the digital space is 'mediocre' due to the need for more customer education.

Owen Rickert requested an update on MIORA's performance, including the number of clubs operating in, member adoption, visits, and its ramp throughout 2026 and 2027. He also asked about the performance of LT Health (the supplement business) across in-club and digital channels, and what to monitor for 2026.

Answer

Erik Weaver, EVP and CFO, stated that 7-8 MIORA locations are now open (up from 2 last year) and are ramping at expectations. Bahram Akradi, Founder, Chairman, and CEO, added that fully opened MIORA locations without hiccups are ramping faster than original models, and MIORA is planned for future clubs, expected to be accessible in every market. For LT Health, Bahram Akradi indicated that the 2026 growth strategy is primarily in clubs, focusing on increasing visibility and educating members on product quality, while the digital space is 'mediocre' due to the need for more direct customer education.

Owen Rickert asked about the role of Life Time Living and Life Time Work in the company's future roadmap and how investors should consider their contribution to growth over the next several years.

Answer

Bahram Akradi, Founder, Chairman, and CEO, stated that standalone Life Time Work locations are performing well, and the Life Time Work Club Lounge within existing clubs is also successful. He highlighted that Life Time Living locations demonstrate superior performance, ramping faster, achieving higher rates per square foot, and showing better retention than regular apartment businesses. However, Akradi emphasized that the company is actively working on alternative capital structures for Life Time Living to keep it off Life Time's balance sheet, as its IRR, while strong, is below that of club operations. He mentioned partnering with external capital for new Life Time Living developments, such as the Paradise Valley location, to continue growing the full campus concept without significant direct investment from Life Time.

Owen Rickert asked about the role of Life Time Living and Life Time Work in Life Time's future roadmap and their expected contribution to growth over the next several years.

Answer

CEO Bahram Akradi explained that standalone Life Time Work locations are performing well but are not a major growth factor, while the in-club Life Time Work Club Lounge is successful. Life Time Living demonstrates superior performance (faster ramp, higher rates, better retention) but the company is actively seeking off-balance sheet capital solutions for its development due to its lower IRR compared to core club operations, aiming to use outside capital for future projects like the Paradise Valley location.

Owen Rickert asked for an update on in-center revenue initiatives, seeking details on what is performing well beyond established programs and where the company sees opportunities for improvement.

Answer

Founder, Chairman, and CEO Bahram Akradi highlighted strong growth from the LTH nutritional supplement line, the successful maturation of the Miura small-format club concept, and the long-term vision for the 'Lacey' AI health companion. He also noted that the Spa and Food & Beverage categories represent further growth opportunities.

Owen Rickert of Northland Securities, Inc. asked for a performance update on the LT Health (LTH) growth initiative and questioned whether its products have any exposure to potential tariffs.

Answer

Bahram Akradi, Founder, Chairman and CEO, stated that the goal for LT Health is to become a highly trusted nutritional brand, highlighting significant recent growth and a focus on product quality. He also noted that other initiatives like LT Digital and MIORA are on schedule. Erik Weaver, Executive Vice President and CFO, acknowledged a potential for tariff risk on some ingredients but stated the company does not expect it to be material.

Owen Rickert of Northland Securities asked for clarification on the 1.7 million digital app subscribers, questioning if this figure is incremental to paying club members. He also inquired about the mix of asset-light versus ground-up new club openings for 2025 and beyond.

Answer

CEO Bahram Akradi confirmed the 1.7 million digital subscribers are entirely incremental and do not include paying club members. Regarding new openings, he stated the pipeline is robust for both asset-light and ground-up models, and the company will mix and match based on opportunity rather than guiding to a specific split, focusing on disciplined growth.

Owen Rickert inquired about the strategy and goals for the portfolio's underperforming clubs, asking if the focus is on renovations, new offerings, or other improvements.

Answer

Founder, Chairman and CEO Bahram Akradi explained that the company is developing a comprehensive business plan for every single location. This detailed, analytical process evaluates the unique vision and opportunity for each club and determines the necessary actions, which could include changes to programming, facilities, or leadership, to maximize its potential.

Owen Rickert asked if the observed consumer trend of leaning into thrift for holiday gifting is sticky and likely to carry over to other major holidays, and how holiday shopping patterns this year compared to prior years.

Answer

COO Jubran Tanious noted a very low attrition rate among loyalty program members, indicating strong customer stickiness. CFO Michael Maher added that Q4 was the strongest comp of the year for the U.S. for the second consecutive year, consistent with broader consumer adoption of thrift, including for gifting, and observed outperformance in giftable categories like toys and jewelry.

Owen Rickert asked if the observed consumer behavior of leaning heavily into thrift for holiday gifting, as seen in Q4, is sticky and could carry over to other major holidays and seasonal moments throughout the year. He also inquired about how holiday shopping patterns this year compared to prior years.

Answer

Jubran Tanious (COO) noted that the company's loyalty database shows a very low attrition rate, indicating the stickiness of thrift adoption. Michael Maher (CFO) highlighted that Q4 was the strongest comp quarter for the U.S. for the second consecutive year, which he believes is consistent with broader consumer adoption and acceptance of thrift, including for gifting, particularly in giftable categories like toys and jewelry.

Owen Rickert inquired about the expected ramp-up and specific details for Better Home & Finance's three recently announced partnerships heading into 2026, and also asked for an update on the future partnership pipeline's evolution.

Answer

Vishal Garg, Founder and CEO of Better Home & Finance Holding Company, detailed the ramp for each partnership: the large financial services platform (multiple billions/month, gradual ramp over 6 months), the large mortgage originator (starting with D2C, MSR recapture, then loan officers for HELOCs/HELOANs over 6 months), and Finance of America (HELOCs/HELOANs to customers, then partners, then wholesale, plus a reverse second lien HELOC in beta, 3-6 months). He also noted that the partnership pipeline has 'exploded' due to faster implementation, quality user experience, programmatic approvals, and frustration with incumbent solutions.

Owen Rickert inquired about the expected ramp-up and future pipeline for Better Home & Finance's three recently announced partnerships, seeking details on their contribution to growth into 2026.

Answer

Vishal Garg, Founder and CEO, outlined phased ramp-up plans for each partnership, including increasing user penetration and staffing needs. He characterized the future partnership pipeline as 'exploded' due to rapid implementation, superior user experience, and market frustration with incumbent solutions.

Owen Rickert of Northland Capital Markets asked about the company's capital allocation strategy, specifically how it balances the stated priority of debt paydown with potential reinvestment in technology and other growth initiatives.

Answer

CEO Perry Moss affirmed that debt repayment is the number one priority, but clarified that investment in technology and automation is also a key focus for future development. Chairman Daniel Friedberg added that the Board supports both debt reduction and profitable growth, viewing the current focus on fixing underlying processes as a crucial first step that unlocks cash and enables more successful automation and growth in the next phase.

Owen Rickert asked about the company's perspective on mergers and acquisitions in the near to medium term, considering the stated focus on operational improvements and debt reduction.

Answer

Chairman Daniel M. Friedberg acknowledged that past acquisitions were crucial for building scale but stated that the company's clear priority now is on driving internal efficiencies, generating cash, and paying down debt. He indicated that while strategic acquisitions are still viable, they are not an immediate focus for capital allocation.

Inquired about the 'land and expand' strategy, whether the sales team is fully optimized, and the current state of the new business pipeline.

Answer

The company is focused on capacity and efficiency, using Sales Development Reps to free up senior sales staff, but there's still room to expand the team. The 'land and expand' strategy is working well, with technology helping to secure expansions with new clients very quickly. The new business pipeline is very strong, beyond expectations, with several key targets in the final stages.

Owen Rickert inquired about the company's "land and expand" sales strategy, whether the sales team is considered fully optimized or has room for growth, and for a characterization of the current new business pipeline.

Answer

Executive S. Hatch responded that the company's focus is on improving sales team capacity and efficiency through structural changes, like using sales development reps, rather than just headcount. He confirmed they have added experienced personnel and will continue to do so for the right candidates. Hatch described the "land and expand" strategy as performing well, with technology enabling faster expansions with new clients. He characterized the new business pipeline as a "real bright spot" that was "beyond what I was hoping for," noting several key targets have moved to the final stages of the sales funnel.

Owen Rickert of Northland Capital Markets asked for a more detailed explanation of the Owlet Connect platform and what makes the company most excited about this offering.

Answer

President Jonathan Harris described Owlet Connect as a groundbreaking platform that will enable real-time health data sharing from babies at home to their neonatologists and healthcare providers. He emphasized that this integration into clinical workflows, without changing them, will allow for continuous monitoring of infants discharged from the NICU, marking a significant step forward in pediatric remote care.

Inquired about the company's marketing strategy for 2025 and whether any shifts in consumer behavior are being observed due to macroeconomic conditions.

Answer

The marketing strategy continues to focus on leveraging FDA and CE medical clearances and parent testimonials, which is proving effective as shown by strong baby registry growth. The company is not currently seeing negative shifts in consumer behavior and remains cautiously optimistic, monitoring trends through metrics like baby registries.

Owen Rickert of Northland Securities requested an update on the breakeven timelines for the Tampa, Austin, Nashville, and Atlanta campuses, as well as the specific enrollment numbers for each of those locations.

Answer

CFO Matt LaVay provided breakeven timelines: Austin is projected for the latter part of fiscal 2024, while Tampa, Nashville, and the new Atlanta campus are on track for fiscal 2025. He noted Atlanta's Tier 1 status allows it to ramp to breakeven more quickly. Chairman & CEO Michael Mathews declined to provide specific enrollment numbers by location, stating it is not the company's practice.