Viva Leisure Ltd. · ASX:VVA
Viva Leisure — FY2023 Earnings Presentation
47 slides from Viva Leisure's earnings presentation, Aug 11, 2023
Slide 1: FY2023 Full year results presentation
FY2023 Full year results presentation 11 AUGUST 2023 ASX | VVA
Slide 2: Contents page
CONTENTS PAGE FY2023 HIGHLIGHTS 3 FINANCIAL RESULTS 9 CAPITAL ALLOCATION STRATEGY 19 BUSINESS STRATEGY & OUTLOOK 23 BRANDS & SEGMENT UPDATE 33 APPENDIX 42
Slide 3: FY2023 Highlights
VIMALEISURE FY2023 FULL YE, RESULTS PRESENTATION:
Slide 4: Viva Leisure reports record profits; growth surges
VIVA LEISURE REPORTS RECORD PROFITS; GROWTH SURGES ■ Revenue increased by 55.4% to $141.2 million, driven primarily by strong organic growth ■ Record EBITDA* surges 429.2% to $29.2 million, reflecting improved margins and operational efficiency ■ EBITDA* margin inline with H1-FY2023 , maintained at
Slide 5: FY2023 guidance milestones achieved
FY2023 GUIDANCE MILESTONES ACHIEVED FINANCIAL HIGHLIGHTS Revenue EBITDA* FY2023 FY2023 ▪ Guidance issued in October $141.2m $29.2m 2022 achieved Guidance $137m to 140m Guidance: $28m to 30m ▪ Result demonstrates the resilience of the business ▪ The Company has achieved KEY DRIVERS record levels of m
Slide 6: Operational progress positions Viva for growth
OPERATIONAL PROGRESS POSITIONS VIVA FOR GROWTH FY2023 HIGHLIGHTS FINANCIAL OPERATIONAL Revenue EBITDA* Members Members (ex AASB-16) (Owned Locations) (All Locations) $141.2m $29.2m 181,950 343,325 Up 55.4% [FY22: $90.8m] Up 429.2% [FY22: $5.5m] Up 14% [FY22: 159,546] Up 7.2% [FY22: 320,161] NPAT* St
Slide 7: Financial snapshot
FINANCIAL SNAPSHOT RECORD REVENUE AND EBITDA ACHIEVED F Y 2 0 2 0 R E P R E S E N T S F I R S T F U L L Y E A R A S L I S T E D C O M P A N Y REVENUE ($M) EBITDA ($M) 29.2 141.2 CAGR CAGR 15.2 +51% +69% 73.8 90.8 83.7 11.9 47.8 56.8 5.5 40.9 6.3 6.1 14.0 17.9 67.4 0.5 9.3 35.9 34.0 5.6 5.6 23.0 FY20
Slide 8: June 2023 run rates
JUNE 2023 RUN RATES Annual# Monthly# Daily# Revenue Run Rate Revenue Run Rate Revenue Run Rate $156.4m $12.9m $428,375 PCP $124.5m PCP $10.2m PCP $341,138 Average Revenue# LFL Membership+ System-wide Sales* Per Member Per Week Jun 2022 v Jun 2023 Annual Revenue Run Rate $15.59 +5.0% $107.6m PCP $14.
Slide 9: Financial Results
VIMLEISURE FY2023 FULL YE, RESULTS PRESENTATION:
Slide 10: Revenue growth ($m)
REVENUE GROWTH ($M) MONTHLY REVENUE GROWTH [JUNE 2022 V JUNE 2023] 141.2 0.9 1.2 3.5 LEGEND ▪ Pre FY2023 Clubs refers to locations which were operating prior to the FY2023 period commencing 55.4% ▪ FY2023 Opened Clubs refers to 44.8 55.4% locations opened during the Revenue financial year growth ▪ F
Slide 11: Average revenue per member per week ($)
AVERAGE REVENUE PER MEMBER PER WEEK ($) CONTINUES TO INCREASE EACH MONTH +13% +7% HIGHLIGHTS $15.59 15.6 ▪ 7% increase in average weekly 15.4 rate over previous year 15.2 ▪ 13% increase in yield over June 2021 15.0 14.8 ▪ Weekly rate expected to continue to improve during 14.6 $14.59 FY2024 14.4 ▪ A
Slide 12: Member base continues to grow
MEMBER BASE CONTINUES TO GROW INCLUDES CORPORATE & FRANCHISE NETWORK MEMBERS MEMBERS 5% BY STATE 1.1% 17% 31% 7.2% ACT NSW VIC 13% QLD WA 34% 343 347 333 320 MEMBERS 298 BY SEGMENT 297 275 47% Viva Owned 53% Plus Fitness (AU/NZ) 31-Dec-20 30-Jun-21 31-Dec-21 30-Jun-22 31-Dec-22 30-Jun-23 31-Jul-23 A
Slide 13: Member growth
MEMBER GROWTH MEMBER GROWTH IN CORPORATE OWNED LOCATIONS CONTINUES 183.6 182.0 1.6 LEGEND ▪ Pre FY2023 Clubs refers to 11.3 locations which were operating prior to the FY2023 period commencing ▪ FY2023 Opened Clubs refers to 3.1 locations opened during the financial year ▪ FY2023 Acquisitions refers
Slide 14: Utilisation
UTILISATION RECORD UTILISATION ACROSS OWNED PORTFOLIO HIGHLIGHTS 72.7% 72.7% ▪ June 2023 achieved record portfolio utilisation however was brought back slightly with multiple club openings in the month ▪ Utilisation refers to Viva estimated maximum 69.3% capacity per location: ▪ Health Clubs estimat
Slide 15: Results reflect strong growth
RESULTS REFLECT STRONG GROWTH PROFIT & LOSS HIGHLIGHTS FY2023 FY2022 Variance Variance (ex AASB16) (ex AASB16) $ % ▪ Revenue growth derived mainly from organic growth Revenue 141.2 90.8 50.4 55.4 ▪ EBITDA margin maintained at H1-FY2023 level of 20.7% despite Operating Costs (112.0) (85.3) (26.7) 31.
Slide 16: Balance sheet
BALANCE SHEET CONTINUED INVESTMENT IN GROWTH ($m) FY2023 FY2022 Cash 6.8 10.1 HIGHLIGHTS Receivables and other Current Assets 4.4 4.3 P, P & E 60.0 52.0 ▪ Significant re-investment in our portfolio and new Greenfield Right of Use Assets 222.9 224.4 sites Intangibles 74.8 66.2 Deferred Tax 77.7 77.7
Slide 17: Cash flows
CASH FLOWS REINVESTMENT IN THE BUSINESS HAS BEEN THE FOCUS OVER THE YEAR ($m) FY2023 FY2022 HIGHLIGHTS Opening cash 10.1 17.3 ▪ 90% improvement in cash flows from operations Cashflows from Operations 53.1 27.9 ▪ Large investment in Investment in P,P,E and Intangibles (19.2) (12.3) acquisitions, refu
Slide 18: Group margin
GROUP MARGIN LOCATION EBITDA ABOVE 40% ON AVERAGE FY2023 Half on Half Group Margin ($m) H1 FY2023 H2 FY2023 TOTAL Growth HIGHLIGHTS ▪ Location EBITDA margin Revenue 67.4 73.8 141.2 9.5% maintained above 40% Expenses (Incl Rent) 38.8 43.0 81.8 10.8% ▪ Reduction of corporate costs as a percentage of r
Slide 19: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY
Slide 20: Cashflow analysis
CASHFLOW ANALYSIS INVESTING IN OUR FUTURE Cashflow Details ($m) FY2023 EBITDA (Pre-AASB16) 29.2 HIGHLIGHTS Debt and Interest Payments (Ex Property) (13.6) ▪ Conversion of EBITDA to FCF of Sale of Property Plant and Equipment 0.4 42.1% (up from 38.7%) for Maintenance CAPEX (3.7) H1-FY2023 Free Cash F
Slide 21: Capex analysis
CAPEX ANALYSIS FY2023 COMMENTS CAPEX Summary for Period $m % of Revenue ▪ New site capex is Greenfield sites ▪ Site upgrade capex is for New Site Capex 7.1 5.0% significant one-off works of existing clubs identified to offer Site Upgrade Capex 5.6 4.0% upside opportunity Total Expansionary Capex 12.
Slide 22: 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 ~$17m of revenue Undrawn
Slide 23: Business Strategy & Outlook
BUSINESS STRATEGY & OUTLOOK
Slide 24: Strategic review
STRATEGIC REVIEW Viva’s primary objective is to provide an improving return to shareholders This is achieved over the short and long-term by: Capitalising on our tech Commercialising our in-house developed technology platforms, billing services and unique apps to the market which creates a significa
Slide 25: Strategic review focus
STRATEGIC REVIEW FOCUS FY2023 REVIEW PROVIDED LEARNINGS TO TAKE INTO FY2024 AND BEYOND KEY FOCUS POINTS AND CONSIDERATIONS Property Leases hiit republic Group Fitness Studios Upcoming 5 year property leases provide for A scarcity of instructors in some regions, and A shift in member usage patterns a
Slide 26: Strategic review focus
STRATEGIC REVIEW FOCUS FY2023 REVIEW PROVIDED LEARNINGS ON OPTIMISING ROI FOR INDIVIDUAL CLUBS 30 June 2023 Locations Member Member Pre Upgrade Cash Cost Run-rate ROIC1 Target ROIC1 Upgraded Increase Growth % EBITDA EBITDA 21 (16 during $5.6m 4,212 11.9% $5.67m $8.13m 43.4% 70-75% H2-FY2023) What we
Slide 27: FY2024 focus
FY2024 FOCUS ACCELERATING THE UPGRADE AND REFURBISHMENT PROGRAMS ▪ Club Lime brand provides best upside and opportunity now that it has scale (>100 locations) ▪ Simpler to operate with lower reliance on certified and qualified staff to teach classes OPTIONS FOR CONSIDERATION Renew Merge Relocate Ren
Slide 28: FY2024 focus
FY2024 FOCUS ACCELERATING THE UPGRADE AND REFURBISHMENT PROGRAMS Management expects the FY2024 program to be as follows: 12 Month 12 Month Locations Pre Upgrade Post Upgrade Target Cash Cost Member Member Growth identified EBITDA EBITDA1 ROIC Increase Target % 27 $7.5m 5,200 19.4% $5.95m $11.95m 80%
Slide 29: Projects being delivered in FY2024
PROJECTS BEING DELIVERED IN FY2024 Potential Annual Expected Commencement Project Contribution ($m) date COMMENTS Digital Signage 0.3 Q3-FY2024 ▪ Financial contributions expected to range across FY2024, with full contribution’s expected in FY2025 Viva Hub 1.2 Q3-FY2024 Viva Pay 2.4 Q3-FY2024 FY2024
Slide 30: Strong pipeline underpins ongoing growth in locations
STRONG PIPELINE UNDERPINS ONGOING GROWTH IN LOCATIONS HEALTH CLUBS AND UPGRADES TO FOCUS IN FY2024 171 Operating Locations 20-27 Scheduled for Upgrades 11 New Greenfield locations secured 12 Under negotiation for lease or to acquire FY2024 will focus on upgrading high Focus of growth is with Viva Le
Slide 31: Growth from maturing network
GROWTH FROM MATURING NETWORK SIGNIFICANT UPSIDE AS CLUBS MATURE +219% $395K HIGHLIGHTS 400 350 ▪ EBITDA listed is location EBITDA, including all direct costs at a club (rent, electricity, wages, etc), but excluding group corporate overheads 300 and other costs (ie: group marketing) 250 ▪ Viva’s unde
Slide 32: Non-membership revenue
NON-MEMBERSHIP REVENUE HIGHLY PROFITABLE AND GROWING NON-MEMBERSHIP REVENUE VIVA LABS Franchise Income Vending Machines Viva Labs* Flex Pass Licencing Fees ~$7.5m ~$1.8m ~$1.2m ~$0.4m per annum per annum per annum per annum Personal Training Corporate Viva Pay Digital Signage * Licence Fees Membersh
Slide 33: Brands & Segment Update
BRANDS & SEGMENT UPDATE
Slide 34: Competitive landscape
COMPETITIVE LANDSCAPE SIGNIFICANT OPERATOR IN THE MARKET 551 50% 443 339 40 of the Australian Fitness Market 246 234 2,534 locations listed, representing 50% of the market according to IBIS World 107 Gyms and Fitness Centres in Australia report dated February 2023 183 147 127 123 192 73 40 39 31 26
Slide 35: Expanded portfolio
EXPANDED PORTFOLIO Viva’s portfolio has expanded and strengthened over the previous four years, with a focus on highly profitable and sustainable reoccurring revenue 2019 (IPO) 2023 TECH & FINANCE OPPORTUNITIES WELLNESS & TECH RECOVERY INNOVATIONS Technology division highly profitable Expected to co
Slide 36: 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 37: Club Lime
CLUB LIME HEALTH CLUBS ▪ With 103 Club Lime health clubs in Australia, it is the largest non-franchised health club brand in the country FY2024 GOALS ▪ The Viva Leisure Health Club Portfolio includes 127 locations: ▪ Grow network to between 110- ▪ 103 x Club Lime branded (including Club Lime Ladies
Slide 38: GroundUp
GROUNDUP BOUTIQUE: PILATES, YOGA & BARRE Our latest boutique offering FY2024 GOALS ▪ Yoga, Pilates and Barre with one membership ▪ Clean, white, natural fit-out ▪ Open four additional studios already secured ▪ Including first location ▪ Three locations now operating at combined ~105% utilisation (ie
Slide 39: Rebalance Pilates & Yoga
REBALANCE PILATES & YOGA BOUTIQUE: PILATES & YOGA FY2024 GOALS Our new franchised boutique offering ▪ Sell first franchised location ▪ Yoga and Pilates ▪ Continue to improve on the new instructor training processes to ▪ Simple affordable fit-out suitable for franchising assist with franchise roll-ou
Slide 40: hiit republic
HIIT REPUBLIC BOUTIQUE: FUNCTIONAL FITNESS Functional Training brand: FY2024 GOALS ▪ Functional class based training ▪ Focus on existing network to improve utilisation ▪ 27 locations open (ACT, NSW, VIC and QLD) ▪ Look to exit or reconfigure under-performing locations ▪ Multiple Unique Selling Point
Slide 41: Plus Fitness
PLUS FITNESS LOW COST, LOW SERVICE HEALTH CLUB FRANCHISE OFFERING Update: FY2024 GOALS ▪ Roll-out of new design going well, 52 locations currently operating with new design (~27% of AU portfolio). A further 39 existing locations expected to be upgraded in FY2024 ▪ Achieve >50% of network operating w
Slide 42: Appendix
VIMLEISURE
Slide 43: Statutory reconciliation & normalisations
STATUTORY RECONCILIATION & NORMALISATIONS UNDERLYING & AASB16 FOR FY2023 COMMENTS FY2023 AASB16 FY2023 ▪ Rent expense excludes deferred ($m) rent of prior periods Statutory Impact (pre AASB16) ▪ Removal of amortisation of Right of Use Asset Revenue 141.2 0.0 141.2 Expenses (75.7) (36.3) ($112.0) ▪ R
Slide 44: Capital allocation application
CAPITAL ALLOCATION APPLICATION TARGET MATURE SITE ECONOMICS BY BRAND Greenfield Locations Acquisitions^ Application of Capital Model COMMENTS Club Lime Hiit Republic Ground Up Independent Plus Fitness ▪ Acquisitions assume a 3.0x Club Size (m2) 700 250 350 700 400 multiple acquisitions price, with i
Slide 45: Technology update
TECHNOLOGY UPDATE THE HUB AND VIVA PAY Largest investment in IT upgrade nearing go-live: ▪ Franchisee and Viva team training on the Hub now underway ▪ Ready to go live, finalising data transfer from existing Plus Fitness membership and direct debit provider ▪ Door access control hardware deployment
Slide 46: Member visits ('000)
MEMBER VISITS (‘000) VISITATIONS CONTINUE TO INCREASE HIGHLIGHTING THE LIFESTYLE NATURE OF INDUSTRY 2,400 2,200 Based on days per month HIGHLIGHTS ▪ ~2.1 million visits to facilities in 2,000 June 2023 (30 days), was 1.7 1,800 million visits in June 2022 1,600 ▪ >25 million member visits per year ac
Slide 47: 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