Viva Leisure Ltd. · ASX:VVA
Viva Leisure — H1 FY2023 Earnings Presentation
39 slides from Viva Leisure's earnings presentation, Feb 23, 2023
Slide 1: H1 FY2023 results presentation
H1 FY2023 results presentation 23 FEBRUARY 2023 ASX | VVA
Slide 2: Highlights
a. HIGHLIGHTS HI FY2023 RESULTS PRESENTATION
Slide 3: Viva: Full speed ahead
VIVA: FULL SPEED AHEAD AN UNINTERRUPTED HALF YEAR RESULT With H2 FY2022 providing Viva’s first six months of uninterrupted trade for several years, H1 FY2023 has continued that momentum and has generated a true result on the performance of the business EBITDA* for H1 FY2023 exceeded all previous
Slide 4: Operational progress positions Viva for growth
OPERATIONAL PROGRESS POSITIONS VIVA FOR GROWTH H1 FY2023 HIGHLIGHTS FINANCIAL OPERATIONAL Revenue EBITDA* Members Members (ex AASB-16) (Owned Locations) (All Locations) $67.4m $14.0m 172,406 333,423 Up 98.3% [HY22: $34.0m] Up $17.8m [HY22: -$3.8m] Up 30.4% [HY22: 132,190] Up 12.2% [HY22: 297,211] NP
Slide 5: Financial snapshot
FINANCIAL SNAPSHOT RECORD HALF-YEAR REVENUE AND EBITDA ACHIEVED FY2023 Columns include Lower and Upper Guidance which has been reaffirmed REVENUE ($M) EBITDA ($M)* +54% +445% 140.0 3.0 30.0 2.0 69.6 90.8 14.0 83.7 47.8 56.8 11.9 40.9 5.5 33.1 7.3 6.3 17.9 67.4 6.1 14.0 24.1 5.2 0.5 20.7 35.9 34.0 3.
Slide 6: Financial results
FINANCIAL RESULTS
Slide 7: H1 FY2023 results reflect strength of the business
H1 FY2023 RESULTS REFLECT STRENGTH OF THE BUSINESS PROFIT & LOSS H1 FY 2023 H1 FY 2022 Variance Variance Profit & Loss ($m) HIGHLIGHTS (ex AASB16) (ex AASB16) $ % ▪ Near doubling of Revenue over PCP Revenue 67.4 34.0 33.4 98.3% Operating Costs (53.5) (37.8) 15.7 41.5% ▪ EBITDA up $17.8m over PCP EBI
Slide 8: Balance sheet
BALANCE SHEET CONTINUED INVESTMENT IN GROWTH ASPIRATION DESPITE H1-FY2022 COVID IMPACTS Balance Sheet ($m) H1 FY 2023 FY 2022 HIGHLIGHTS Cash 8.4 10.1 ▪ Investment in 11 new Receivables and other Current Assets 3.3 4.3 greenfield sites and P, P & E 55.2 52.0 acquisitions Right of Use Assets 217.3 22
Slide 9: Cash flows
CASH FLOWS PRUDENT CASH MANAGEMENT HAS BEEN A PRIORITY OVER THE YEAR Cash Flows ($m) H1 FY2023 H1 FY2022 HIGHLIGHTS ▪ Investment of $11.0m in Opening cash 10.1 17.3 total capex (Greenfields, acquisitions, major works Cashflows from Operations 24.6 2.6 and maintenance) Investment in P,P,E and Intangi
Slide 10: Quarterly P&L
QUATERLY P&L EBITDA MARGIN CONTINUES TO IMPROVE Half on Q3-FY22 Q4-FY22 Q1-FY23 Q2-FY23 Quarterly P&L ($m) 2H FY22 H1 FY23 Half (Mar) (Jun) (Sep) (Dec) Growth HIGHLIGHTS Revenue 26.7 30.2 56.8 33.0 34.4 67.4 18.7% ▪ Significant Qtr on Qtr growth for calendar year Expenses 15.2 16.4 31.6 17.8 18.0 35
Slide 11: Operational review
‘> \ ae REVIEW HI FY2023 RESULTS PRESENTATION
Slide 12: Strong pipeline underpins ongoing growth in locations
STRONG PIPELINE UNDERPINS ONGOING GROWTH IN LOCATIONS BOUTIQUE BRANDS TO REMAIN FOCUS FOR FY2023-24 166 Operating Locations 14 New Greenfield locations secured 2 Agreed Acquisitions All our brands continue to expand Focus of growth is with Viva Leisure’s Agreed Acquisitions are both health into new
Slide 13: Revenue growth ($m)
REVENE GROWTH ($M) 40% MONTHLY REVENUE GROWTH [DEC 2021 V JAN 2023] 11.72 0.47 11.25 0.05 LEGEND 1.08 ▪ Pre CY2022 Clubs refers to locations which were operating prior to the CY2022 period commencing 0.43 +40% ▪ CY2022 Opened Clubs refers to locations opened during the calendar year ▪ CY2022 Acquisi
Slide 14: Member growth
MEMBER GROWTH CONTINUED MEMBER GROWTH IN CORPORATE OWNED LOCATIONS 177,279 4,873 172,406 HIGHLIGHTS ▪ Membership growth of 33% (>45,000 members) between December 2021 21,609 and 20 February 2023 ▪ Membership growth has accelerated in February 2023 +45,089 6,364 LEGEND ▪ Pre CY2022 Clubs refers to lo
Slide 15: Member base continues to grow
MEMBER BASE CONTINUES TO GROW NSW NOW LARGEST MARKET FOR VIVA MEMBERS 6% BY STATE As at December 2022 +3% 17% 32% +12% 343,352 ACT 333,423 NSW 320,161 VIC 298,376 297,211 12% QLD 275,272 WA 34% 94,196 MEMBERS BY AsSEGMENT at December 2022 54,039 29,124 35,631 48% Viva Owned 52% Plus Fitness (AU/NZ)
Slide 16: Utilisation
UTILISATION RECORD UTILISATION ACROSS OWNED PORTFOLIO 75% 74% 73.3% 73.6% HIGHLIGHTS 73% 72.7% 72% ▪ Utilisation refers to Viva estimated maximum 71.3% capacity per location: 70.9% 71% ▪ Health Clubs estimate 2.0 members per 70.2% 70% square metre 69.3% 69.4% ▪ Hiit Republic & Boutiques at 1.0 membe
Slide 17: Group margin
GROUP MARGIN LOCATION EBITDA NOW ABOVE 40% ON AVERAGE Half on Half Group Margin ($m) H1 FY2023 2H FY2022 Growth HIGHLIGHTS Revenue 67.4 56.8 18.7% ▪ Significant improvement in Club ‘four Expenses (Incl Rent) 38.8 34.7 11.7% wall’ EBITDA margin ▪ Driven largely by utilisation Location EBITDA 28.6 22.
Slide 18: Brands & segment update
BRANDS & SEGMENT UPDATE
Slide 19: Viva's expanding portfolio
VIVA’S EXPANDING PORTFOLIO TARGETING ALL SEGMENTS Rebalance Pilates Club Lime Club Lime Hiit Republic Plus Fitness GroundUp Psycle Life & Yoga Aquatics Segment Health Clubs Boutique Health Clubs Boutique Boutique Boutique Aquatics High quality High quality High quality Medium quality facilities, mid
Slide 20: Club Lime
CLUB LIME HEALTH CLUBS Australia’s Largest (Non-franchised) Health club brand Locations FY2023 GOALS ▪ With 98 Club Lime health clubs in Australia, it is the largest non-franchised health club brand in the country. ▪ Achieve >100 locations ▪ 2 additional locations secured for acquisition, and 9 gree
Slide 21: GroundUp
GROUNDUP BOUTIQUE: PILATES, YOGA & BARRE FY2023 GOALS Concept proven, roll-out now in place: ▪ >1,100 members paying >$50 per week across three ▪ Yoga, Pilates and Barre – 3 studios, 1 location, 1 membership existing studios ▪ Clean, white, natural fit-out ▪ Maintain >1x members per square metre rat
Slide 22: Rebalance Pilates & Yoga
REBALANCE PILATES & YOGA BOUTIQUE: PILATES & YOGA Our new franchised boutique offering FY2023 GOALS ▪ Yoga and Pilates ▪ Finalise franchising setup and systems ▪ Simple affordable fit-out suitable for franchising ▪ Sell first franchised location ▪ 10 locations now in portfolio ▪ Implement new instru
Slide 23: Hiit Republic
HIIT REPUBLIC BOUTIQUE: FUNCTIONAL FITNESS Functional Training brand: ▪ Functional class based training FY2023 GOALS ▪ Achieve >30 operating ▪ 27 locations open (ACT, NSW, VIC and QLD) locations by EOFY ▪ 1 additional location secured ▪ Finalise franchising setup and systems ▪ Multiple Unique Sellin
Slide 24: Plus Fitness
PLUS FITNESS LOW COST, LOW SERVICE HEALTH CLUB FRANCHISE OFFERING Update: FY2023 GOALS ▪ 15 new Franchise agreements executed ▪ Achieve >20% of network ▪ New corporate branding complete at 23 franchises (~12% of network) operating with new design ▪ Targeting 50 locations to have new design by EOFY a
Slide 25: Capital allocation strategy
CAPITAL ALLOCATION STRATEGY
Slide 26: Cashflow analysis
CASHFLOW ANALYSIS INVESTING IN OUR FUTURE Cashflow Details ($m) H1 FY2023 EBITDA (Pre-AASB16) 14.0 Debt and Interest Payments (Ex Property) (6.6) HIGHLIGHTS Maintenance CAPEX (2.0) ▪ Conversion of EBITDA to FCF of 38.7% for the period Free Cash Flow (FCF) 5.4 ▪ VivaPay will be a high margin Investme
Slide 27: Capex analysis
CAPEX ANALYSIS H1 FY2023 CAPEX Summary for Period $m % of Revenue COMMENTS ▪ Site Upgrade Capex: New Site Capex 3.6 5.2% ▪ Merger of two Shellharbour, Site Upgrade Capex 1.2 1.9% NSW locations Total Expansionary Capex 4.8 7.1% ▪ 3 sites with major upgrades ▪ Members increased Technology Capex 1.4 2.
Slide 28: Capital allocation principles
CAPITAL ALLOCATION PRINCIPLES RE-INVESTMENT GROWTH LEVERAGE Maintenance Capex Investment Leverage of into Target ~3% greenfield locations & 1.5x to 2.0x of revenue acquisitions (Senior Debt + Equipment Finance)/EBITDA Tech Capex Target Debt Facilities Target ~3% 24+ sites pa ~$21m of revenue From fr
Slide 29: Capital allocation application
CAPITAL ALLOCATION APPLICATION TARGET MATURE SITE ECONOMICS BY BRAND Greenfield Locations Acquisitions^ Application of Capital Model Club Lime Hiit Republic Ground Up Independent Plus Fitness Club Size (m2) 700 250 350 700 400 COMMENTS Revenue ($) 775,000 365,000 635,000 775,000 400,000 ▪ Acquisitio
Slide 30: Capital allocation application
CAPITAL ALLOCATION APPLICATION VIVA NOW HAS A SELF FUNDING MODEL Based on: ▪ Targeting the achievement of >$900k per month of FCF (before tax) ▪ Application of the Group’s capital allocation principles “67% agree that their Club Lime Target: health club ▪ Self-funding roll-out of 24+ sites per annum
Slide 31: Outlook & strategy
_ wAR 4. & STRATEGY RESULTS PRESENTATION
Slide 32: Outlook & strategy: Prioritising lifestyle
OUTLOOK & STRATEGY PRIORITISING LIFESTYLE Viva commissioned Roy Morgan to conduct independent research on Club Lime members, and their priority of “86% agree that their membership is important to their health and fitness in an increasing inflationary overall wellbeing” environment. The results are n
Slide 33: Outlook & strategy: Recovery complete, growth strategy back in play
OUTLOOK & STRATEGY RECOVERY COMPLETE, GROWTH STRATEGY BACK IN PLAY More than just a group of health clubs, Viva has created a diverse ecosystem with multiple income streams Strategic Focus for H2-FY23 and beyond: ▪ Maximising FCF generation from scale and operations built over the past three years s
Slide 34: Reaffirming guidance
REAFFIRMING GUIDANCE
Slide 35: Reaffirming FY2023 guidance
REAFFIRMING FY2023 GUIDANCE Guidance H1 FY2023 Achieved ▪ Despite the impact of inflationary pressures, Viva has experienced solid organic membership growth for the beginning of H2 FY2023 Revenue Revenue ▪ Management now has visibility on Range increased utilities costs $137m to $140m $67.4m ▪ Surve
Slide 36: Drivers to achieve guidance
DRIVERS TO ACHIEVE GUIDANCE Drivers to achieve Guidance H1 FY2023 Achieved Corporate Members Corporate Members HIGHLIGHTS FOR Range H1 FY2023 173k to 178k 172.4k 177.3k ▪ Traditionally the business operates in a 45% (H1) FY22: 159k H1 FY2023 20 Feb 2023 to 55% (H2) ratio of EBITDA as locations opene
Slide 37: Appendix
H1 FY2023 RESULTS PRESENTATION.
Slide 38: Statutory reconciliation & normalisations
STATUTORY RECONCILIATION & NORMALISATIONS UNDERLYING & AASB16 FOR H1 FY2023 H1 FY2023 AASB16 H1 FY2023 ($m) Statutory Impact (pre AASB16) COMMENTS ▪ Rent expense excludes deferred rent Revenue 67.4 0.0 67.4 of prior periods Expenses (35.5) (17.9) (53.4) ▪ Removal of amortisation of Right of Use Asse
Slide 39: Important notice and disclaimer
IMPORTANT NOTICE AND DISCLAIMER Important information Future performance The information in this presentation is general in nature and does not purport to be complete. It has This presentation may contain certain ‘forward-looking statements’. Forward-looking statements include been prepared by Viva