Gym Group PLC · LSE:GYM
Gym — The Gym Group — H1 2022 Earnings Presentation
24 slides from Gym's earnings presentation, Aug 4, 2022
Slide 1: H1 2022 Results, 4 August 2022
4 August 2022
Slide 2: Forward-looking statement disclaimer
Forward-looking statement disclaimer This presentation and information communicated verbally to you contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of The Gym Group plc. These projections and f
Slide 3: Agenda
Agenda ¢ H1 Overview & Financial Update * Operational Update ¢ Summary & Outlook
Slide 4: Recovery well underway and growth strategy on track
Recovery well underway and growth strategy on track 00 ce ull A) Membership & LFL Run rate EBITDA? growing Site rollout on track Revenue Growth Q2 annualised EBITDA? run rate of £46m 212 sites at 30 June 790k Members at Jun 22 (+10% vs Dec 21) 7 organic openings 3 Fitness First sites acquired u = LF
Slide 5: Financial Summary
Financial Summary Revenue £84.2m +187% +£54.9m vs PY (Jun 2021: £29.3m) Group Adjusted EBITDA Less Normalised Rent £17.0m n/a +£25.1m vs PY (Jun 2021: Loss of £8.1m) Adjusted Loss before Tax £4.7m +83% +£22.7m vs PY (Jun 2021: Loss of £27.4m) Free Cash Flow £6.9m n/a +£11.3m vs PY (Jun 2021: Cash Ou
Slide 6: Average Headline Rate and Price Position vs Competitors
Average Headline Rate (£ inc. VAT) LIVE IT Penetration Jun 21 Dec 21 Jun 22 HY21 FY21 HY22 Average difference to The Gym Price Position (Epm) vs Competitors, Jun 2022! Group in competing locations @ ‘cyws: @ £20.60) (2 ‘@ PUREGYM CR 523.45] energie — SEs shure Yon belong
Slide 7: Income statement summary HY 2022 vs HY 2021
£m HY 2022 HY 2021 % Change • Revenue 84.2 29.3 187.4% Cost of sales (0.8) (0.5) (60.0%) Gross profit 83.4 28.8 189.6% • Site costs (41.8) (21.5) (94.4%) Other Income 0.3 6.5 (95.4%) Central costs (8.4) (7.1) (18.3%) Normalised Rent (16.5) (14.8) (11.5%) Group Adjusted EBITDA Less Normalised Rent 17
Slide 8: Back to being cash generative
Back to being cash generative 5 £m HY2022 FY2021 Change Bank Net Debt (80.6) (377) (12.9) Finance Lease Debt (7.0) (6.4) (0.6) Total Net Debt (57.6) (44.1) (13.5) 94 bl : [| () .° ~ i (5) (64) (13.5) (20) Group Movement Maintenance Group Non-Underlying _ Interest & Tax Free Expansionary _FitnessFirs
Slide 9: Run rate EBITDA improving and leverage ratio falling
Run rate EBITDA! improving and leverage ratio falling EBITDA! of £17.0m in H1 2022 (£5.5m Q]; £11.5m Q2) + £11.5m Q2 EBITDA! equates to £46.0m on annualised run rate basis? + LTMS EBITDA! of £30.8m and growing rapidly as no longer overlapping closure periods (Q1 2021) * Debt growing due to rapid pac
Slide 10: Operational Update
Operational Update Ann-Marie Murphy, Chief Operating Officer
Slide 11: Operational metrics stronger than ever
Operational metrics stronger than ever Memberships reduce in summer vs Qlas students leaveandsome Jun 22 LEL Revenue vs 2019 by region! members train outside * July traded in line with expectations * Next phase of growth in Sep/Oct * LFL Revenue 90% of 2019 levels in Jun 22! eae * Membership engagem
Slide 12: New sites performing well, on track to deliver in FY22
New sites performing well, on track to deliver 28 in FY22 7 organic sites open and 3 sites acquired from Fitness First takes total estate to 212 at 30 Jun (+10 from Dec 21) Strong pipeline provides confidence: * 4 further sites opened in Jul 22 bringing total number of open sites to 215! * Further 1
Slide 13: New platform delivered and brand about to launch
New platform delivered and brand about to launch © © © © 1S) H1 Platform & website upgraded Seamless implementation to deliver platform benefits: * Strong web traffic and Google rankings * SEO benefits * Faster site * Improved conversion * Enhanced members area July Begin signage update New sites op
Slide 14: Continued momentum towards our sustainability goal
: ° eqs AT Y Continued momentum towards our sustainability goal Soan® NEUTRAL “tat” CarbonNeutral.com * Our members * Motivating members to visit our gyms at least 4x per month - driving social value and helping to improve members’ health * Our environment * Commitment to SBTi, establishing our path
Slide 15: Summary & Outlook
Summary & Outlook O1 02 Membership recovery well Tech platform successfully underway with yield increases launched and on track to implemented deliver rebrand in Q3 03 04 Growing estate rapidlytotake Next phase of growth: Sep/Oct advantage of market from students, normalisation opportunity of workin
Slide 16: Q&A
Q&A
Slide 17: Business KPIs
Business KPls £m H12018 H12019 H12020 H12021 H12022 21-22% change Financial Data Revenue 58.3 74.0 373 29.3 84.2 187% Group Adjusted EBITDA Less Normalised Rent 18.8 24.0 (8.2) (8.1) 17.0 n/a Group Adjusted EBITDA Less Normalised Rent before POC 193 24.6 (79) (7.6) 78 n/a Group Operating Cash Flow 1
Slide 18: Strategic Focus
Strategic Focus * Large & growing market * Scale advantage * Distress of retail / leisure sector * Website & app updates * Improved gym experience & content * Memorable name with strong identity * Increased awareness . . * Lower CPA's, improved conversion and extended tenure * Price point optimisati
Slide 19: Capital Expenditure
Capital Expenditure + 7new sites open in H1 2022 with more sites under construction due to be open in H2 * Tech & Data spend primarily on the platform upgrade work completed in H1 2022 HY 2022. HY2021 %Change New site Capex 12.5 19 Tech & Data 40 12 Expansionary Capex 16.5 91 81.3% Maintenance Capex
Slide 20: Low cost gym penetration and number of low cost gyms
% of total population Number of low cost gyms 7.0 – 8.9% 1,700 – 1,900 5.0 – 6.9% 1,200 – 1,400 4.2% 3.4% 3.7% 756 2.9% 2.0% 1.5% Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 2026F 2030F 2022 2026F 2030F PwC Forecast Management Estimate • • • • • • • • • • •
Slide 21: UK gym membership by segment and low cost share
15.6 14.6 • 11.9 10.5 9.9 • 7.3 5.1 4.6 4.7 • • 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 Total Private Public 9.9 10.4 2015-19 CAGR 9.3 9.8 9.9 8.3 8.7 8.3 7.7 8.0 1.9 2.2 2.5 2.8 2.7 Total +5% 0.7 0.9 1.3 0.4 Low cost +21% 4.2 4.1 4.1 4.1 4.0 4.2 4.1 4.2 3.9 Mid-ma
Slide 22: Site economics and average site ROIC
Revenue 153.1 16,000 sqft 12,000 sqft 8,000 sqft Cost of sales (1.4) Revenue 1,100 900 630 Gross Profit 151.7 Cost of sale 11 9 6 Fixed costs including rent (40.6) Gross Profit 1,089 891 624 Controllable Costs (49.7) Fixed Costs including rent 300 250 170 Site EBITDA less rent 61.4 Controllable Cost
Slide 23: Re-investment
Re-investment \going investment ir and digital product to main Maintenance capex @ 6% of revenue Tech capex @ 3 of revenue Growth capex Investing in high-returning growth opportunities Invest where we can deliver return on capital? of 30%+ Medium term expectation (not a cap) of 25-30 new sites per y
Slide 24: Site revenue and EBITDA maturity by cohort
• • • • 18,000 18,000 35% 16,000 16,000 30% 14,000 14,000 12,000 25% 12,000 10,000 10,000 20% 8,000 8,000 15% 6,000 6,000 10% 4,000 4,000 2,000 5% 2,000 0 0 0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2008 to 2013 2014 to 2017