Sats Asa · OSL:SATS
Sats Asa — Q3 2021 Earnings Presentation
47 slides from Sats Asa's earnings presentation, November 2021
Slide 1: Q3 2021 Interim Report July-September 2021
Q3 2021 INTERIM REPORT JULY-SEPTEMBER 2021 CEO SONDRE GRAVIR CFO CECILIE ELDE
Slide 2: The member base has recovered quickly – back to pre-pandemic level out of October
The member base has recovered quickly – member base back to pre-pandemic level out of October Strong activation of member base and similar behaviour as pre-pandemic, combined with increased focus on health and training results in positive development in yield, visits, PT and retail Foundation for fu
Slide 3: Market positions in Greater Oslo, Stockholm, Helsinki and Copenhagen
#1 position1 with 111 clubs and 298 000 members (2%2) #1 position1 with 85 clubs and 220 000 members (-2%2) 2 #1 position1 with 30 clubs and 62 000 members (-2%2) #2 position1 with 30 clubs and 73 000 members (-11%2) 4 1 3 1 4 10 22 66 Greater Oslo 10 3 Greater Helsinki 5 68 6 4 Greater Stockholm 10
Slide 4: Open clubs, clubs with restrictions and imposed closures
Open clubs Open clubs with restrictions Imposed club closure 4 Note: (1) Status as of 10 November 2021. Situation could change due to national or local restrictions
Slide 5: Post-pandemic habits and increased focus on health and training
Fear of infection by visiting gyms “Stuck in the sofa” post pandemic Outdoor and home training replacing club visits People are getting back to pre-pandemic routines and habits Increased focus on health and training and willingness to invest in a healthy lifestyle Increased activity levels across al
Slide 6: April 2021 represents the low point in member base through the pandemic
April 2021 represents the low point in terms of member base through the pandemic with 87% compared to April 2019 Strong sales performance since reopening has driven the member base up to pre pandemic levels Member churn lower than pre-pandemic levels due to positive activation and visits levels Note
Slide 7: The member base has recovered quickly – back to pre-pandemic level out of October
The member base has recovered quickly – member base back to pre-pandemic level out of October Strong activation of member base and similar behaviour as pre-pandemic, combined with increased focus on health and training results in positive development in yield, visits, PT and retail Foundation for fu
Slide 8: Member activation communication in Q3 2021
Note: The number of emails, app push etc. noted in the text above refers to Q3 2021 8
Slide 9: Total members excluding members on freeze
9 Note:1) Total members excluding members on freeze, based on numbers end of period, adjusted for 9 sold clubs in Denmark
Slide 10: Member base composition EOY 2019 vs October 2021
51% EOY 2019 OCT 2021 10 Note: 1) Based on like-for-like numbers 2) Gender mix based on member base 3) New members in June to October 2019 and 2021 4) The average age of the member base is 1 year younger in 2021 compared to 2019
Slide 11: New onboarding and exit journeys
• New and improved onboarding journey • New and improved exit journey • Activating new members and helping them to • Increasing motivation to continue the membership access the full product offering including GX and • And ensuring a positive exit experience and keeping a digital relation PT 11
Slide 12: Loyalty program SATS Rewards launched
LOYALTY PROGRAM SATS REWARDS LAUNCHED — HIGHLY APPRECIATED BY OUR MEMBERS AND HIGH REWARDS USAGE Sregeays oo = BY sevisiourney (x) a YOU ARE ON , : GOLDLEVEL ~ = eure YOU ARE ON a a PLATINUM LEVEL e. You have been a SATS member for652“» days and finished 158 workouts! Now get your prize! SATS
Slide 13: Freeze rates back to normal level at end of October 2021
• Closed clubs and COVID-19 caused a significant increase in freeze rates during the pandemic • At the end of June, the total freeze level was almost 2x higher than a normal level • The freeze level is back to a normal level at the end of October 2021 Note: Graph illustrates the freeze development i
Slide 14: Performance oriented marketing push supporting yield development
PERFORMANCE ORIENTED MARKETING PUSH WITH LOWER TACTICAL OFFERING VERSUS LAST YEAR SUPPORTING YIELD DEVELOPMENT 6 SATS Norge @ SUPERTILBUD % »° Bli medlem i dag og fa en maned fri trening og fri innmelding! see more 6 SATS Norge @ Prov en av vare gruppetimer og tren deg glad med vare dyktige instrukt
Slide 15: Group training (GX) recovery
• Higher proportion of members with GX dropped off • With restrictions lifted, the number of GX • Due to the stronger than ever GX schedule, during the pandemic due to restrictions on GX classes classes in the larger Stockholm area was 12% sales of new memberships with GX share • Lower sale of new m
Slide 16: Diversified and high quality group training offering
DIVERSIFIED AND HIGH QUALITY GROUP TRAINING OFFERING FOR OUR MEMBERS +» OTHER GX CATEGORIES DANCE # OF RUNNING CLASSES IN OSLO IN WEEK 44 CARDIO CYCLING # OF YOGA CLASSES IN STOCKHOLM IN WEEK 44 RUNNING MARTIAL ARTS SATS
Slide 17: Personal training and retail development
• PT hours per paying member was up 2% in Q3 2021 compared to Q3 2019, driven by increased frequency • Focus on recruitment of PT instructors following a reduction during the pandemic • Sale per visit was up 27% in Q3 2021 compared to Q3 2019, driven by sale of gift cards, and overall increased bask
Slide 18: Growing physiotherapy business in Sweden and Norway
CONTINUING TO GROW OUR PHYSIOTHERAPY BUSINESS IN SWEDEN AND NORWAY V; SUCCESSFUL TREATMENTS OFFERING IN SWEDEN © ROLLING OUT TREATMENTS IN NORWAY ine rene 28 THERAPISTS INSWEDEN Looe} & TREATMENTS YIELD SOMEWHAT BETTER GROSS MARGIN THAN PT SATS
Slide 19: The member base has recovered quickly – back to pre-pandemic level out of October
The member base has recovered quickly – member base back to pre-pandemic level out of October Strong activation of member base and similar behaviour as pre-pandemic, combined with increased focus on health and training results in positive development in yield, visits, PT and retail Foundation for fu
Slide 20: Foundation for continued growth is strong with focus on clusters
FOUNDATION FOR CONTINUED GROWTH IS STRONG WITH FOCUS ON STRENGTHENING CLUSTERS IN LARGE CATCHMENT AREAS @ OPENED BEFORE 2020 @ OPENED IN 2020 AND YTD 2021 CAPITAL CLUSTER EXAMPLES: @ PLANNED OPENING BEFORE END 2023 GREATER OSLO AREA GREATER STOCKHOLM AREA GREATER HELSINKI AREA . > . fl ° AD eer | .
Slide 21: Group training instructors
Vibeke Klemetsen - Yoga Santino Mirenna - Dance 21
Slide 22: Mentra by SATS launch timeline
Make New Years resolutions come true Operational diagnosis From September October 6th From November 1st December From now on Shaping Mentra’s Launch – Mentra sees Live classes every day First deliveries in Focus on increasing market world of workouts the light of the world for you with our Sweden an
Slide 23: Mentra customer testimonials
"For me workout is a lifestyle, “Being able to train during my and to incorporate it in my lunch breaks or after putting everyday life has never been my kids to sleep is a life saver." easier." "I’m not just buying a screen "The mirror fits me perfectly as an or a new tech gadget, I’m addition to my
Slide 24: Value creation enabled by digitalisation
Enabled by Digitalisation D Long-term Value Creation Opportunities Growth in Average Revenue Per Member B (ARPM) A Membership Growth Acceleration of Membership yield growth club roll out through pricing Existing Clubs: Personal training Continued growth in mature A brand new concept and maturing clu
Slide 25: Financial review
FINANCIAL REVIEW
Slide 26: Record high net growth of 7% in the quarter
• Record high net growth of 7% in the quarter, supported by successful sales campaigns and easing of restrictions across the Nordics • Member base ended 2% behind pre-COVID level in Q3 2019, adjusted for the sold clubs in Denmark • Member base as of end October 2021 was 669k, in line with the level
Slide 27: Flexible membership structure and annual price optimization
Flexible membership structure with a “pay for what you need” logic, addressing all budgets Annual price optimization process • New list prices for new members on 1 January • Adjustment for inflation for all existing members on 1 January • Proactively increasing prices for members with significantly
Slide 28: PT and retail growth
PT growth through strong focus on getting new members to try PT (“PT Start”) and stimulating usage frequency through trigger-based communication to members Retail growth through improved assortment including launch of SATS Clothing and SATS Nutrition, and more targeted campaigns and communication Si
Slide 29: Revenues increasing through the quarter
• Increasing revenues through the quarter driven by strong new membership sales, unfreezing memberships and strong retail and PT performance • Monthly membership revenue is expected to grow as like-for-like members are returning to 2019 level and new clubs are maturing • Freeze still slightly higher
Slide 30: Operating expenses and largely fixed cost base
Total operating expenses Like-for-like club operating including COGS and overhead expenses (currency adjusted) (currency adjusted) • The cost base required to operate the current club portfolio is largely fixed • Therefore, as LFL member levels return, and new clubs fill up with new members, • +10 c
Slide 31: EBITDA upside from club expansion
• Significant step-up in club expansion in recent years, both greenfields and • Club expansion hits EBITDA short term but as the clubs mature over the next 24 acquisitions months, the EBITDA contribution from newly opened and signed clubs indicate an upside of 120 million • Greenfields take 6-12 mon
Slide 32: Adjusted EBITDA development by country
• Adj. EBITDA increase in Norway is due to government compensation, offset by lower paying member base, and higher cost base on back of more clubs • Adj. EBITDA decrease in Sweden is due lower paying member base, and higher cost base driven by club expansion • Short term financials will continue to
Slide 33: Capex: maintenance and expansion
• Low maintenance capex in 2021 due to focus on cash preservation, less wear & tear on equipment because of reduced visits, and a lower average age in the club portfolio • Expected normalized annual maintenance capex level of 5% of group revenues • Increase expansion capex in 2021 is due to ramp-up
Slide 34: Liquidity and cash flow
• Satisfactory liquidity with cash balance of NOK 150 million and undrawn RCF amount of NOK 271 million • Negative change in working capital mainly due to accrual for government compensation (87 million) • Liquidity to be strengthened in Q4 2021 after returning to positive operating cashflow and rec
Slide 35: Net debt and leverage
• Net debt increase the past year solely due to EBITDA effect of COVID-19 and club closures • Historically shown deleveraging capability on back of EBITDA growth and high cash conversion • Increased short term flexibility with the addendum to the revolving credit facility agreement 35
Slide 36: Summary
SUMMARY
Slide 37: Summary: record net member growth driven by strong sales and low churn
Record net member growth in the quarter driven by strong sales and low churn Member base fully recovered at the end of October, ahead of own expectations Member habits largely unchanged, and underlying growth in visits, yield, personal training- and retail revenues Positive momentum is not fully ref
Slide 38: Forward-looking statements and alternative performance measures
• This report includes forward-looking statements which are based on our current expectations and projections about future events. Statements herein, other than statements of historical facts, regarding future events or prospects, are forward-looking statements. All such statements are subject to in
Slide 39: Appendix
APPENDIX
Slide 40: Norway
NORWAY " A OUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) WM vietD Tl MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES I GOVERNMENTAL SUPPORTING PACKAGES 292 298 563 485 280 268 276 509 436 73 27% - 175 21% 133 91 @3 202044
Slide 41: Sweden
SWEDEN " ADJ. COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) WM vietD Tl MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 330 | 492 304 59%) 475 63 25% 93 a 59 11% 599 383 cs 245 ar 53 Q5 2020 24 2020 @12021 @22021 Q32021
Slide 42: Finland
FINLAND " ADJ. COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) WM vietD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES I GOVERNMENTAL SUPPORTING PACKAGES ~ 2 | | eS 76 8% 426 7 7 7 66 60 10 Q3 2020 Q4 2020 Q12021 Q2 202
Slide 43: Denmark
DENMARK " ADJ. COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) WM vietD Tl MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES I GOVERNMENTAL SUPPORTING PACKAGES a D—_, 487 1 105 72 7 73 R 15 66 i: 2% 88 2 75 “17 17% Q3 2020 Q
Slide 44: Alternative performance measure definitions
Adjusted country EBITDA before Adjusted EBITDA before impact of IFRS 16 less allocation of Group Profit/(loss) before net financial items, income tax expense, depreciation EBITDA impact of IFRS 16 overhead and cost allocations and amortization Adjusted country EBITDA before Adjusted country EBITDA b
Slide 45: Key figures and KPIs Q3 2021
Amounts in NOK million Q 3 2021 Q 3 2020 Number of clubs, EOP 256 245 Outgoing member base ('000s) 653 662 Average number of members per club 2 551 2 703 ARPM (NOK) 512 490 Yield (NOK) 389 395 Reported EBITDA (MNOK) 333 344 Adjusted EBITDA before impact of IFRS 16 (MNOK) 83 99 Adjusted EBITDA before
Slide 46: IFRS 16 impact on balance sheet and profit and loss
Re por te d C ha nge Exc l. I FRS 16 Amounts in NOK million Q 3 2021 I FRS 16 Q 3 2021 Ba la nc e she e t ite ms - I FRS 16 Property, plant and equipment 671 0 671 Right-of use assets 4 084 4 084 0 Deferred tax assets 163 0 163 Prepaid expenses and accrued income 305 -70 374 Tota l a sse ts 8 238 4
Slide 47: SATS
SATS