Sats Asa · OSL:SATS
Sats Asa — Q1 2023 Earnings Presentation
34 slides from Sats Asa's earnings presentation, 2023
Slide 1: Q1 2023 Interim Report January-March 2023
QI 2023 INTERIM REPORT JANUARY-MARCH 2023 CEO SONDRE GRAVIR CFO CECILIE ELDE INVESTOR RELATIONS: STINE.KLUND@SATS,NO, +47 98 69 9259
Slide 2: Significant step-up in the financial performance
Significant step-up in the financial performance Solid member development combined with price increases proves willingness to pay for gym memberships Cost discipline in operations and overhead costs addressed to utilize scale Continuing the journey toward healthy financials and healthy members, in l
Slide 3: Clubs and members by Nordic market
121 clubs and 330 000 members (6%2) 92 clubs and 249 000 members (8%2) 2 32 clubs and 72 000 members (11%2) 29 clubs and 84 000 members (4%2) 4 3 1 5 11 24 67 Greater Oslo Greater Helsinki 11 4 10 71 11 Greater Stockholm 11 2 1 7 29 Greater Copenhagen 1) Measured by 2021 revenues based on figures fr
Slide 4: Financial result driven by strong member net growth
• Financial result driven by strong member net growth over time • Revenue growth additionally fueled by price increases both for existing and new members • Solid sales continued despite price increases • Churn slightly elevated, as expected Restrictions and imposed club closures 1) Excl. clubs in th
Slide 5: Active members and number of workouts
Δ Δ Δ • Active members are loyal members, and # of workouts is thus an important KPI both financially and in terms of public health • The increase in number of workouts is driven by both an increase in the member base, a reduction of freeze, and an increase in workouts per member 5 5
Slide 6: Group training recovery
• The group training product was more challenging to recover after the pandemic than studio training, but in Q1, the number of group training sessions passed by our previous top performance from Q1 2019 • This is the result of a strong group training focus in the organization since the summer of 202
Slide 7: Making people healthier and happier
• SATS works every day to make people healthier and happier • Contributing to the UN sustainability goal #3: Good Health and Well-being • When only taking into account the members who have reached the WHO’s recommendation for physical activity at SATS alone, SATS members have, the past 12 months, co
Slide 8: Public health responsibility toward students
• Taking an extended public health responsibility toward students during the often sedentary, but highly important exam period • Opening all our clubs across the Nordics for students during daytime one month from May 9 • “Train your brain” at its most relevant Offering free training to all students
Slide 9: SATS Mentra integrated into SATS
• SATS Mentra integrated into SATS to capitalize on the SATS brand • The largest fitness library in the Nordics with 750+ classes ∼ • Offered both to members and non-members 9 9
Slide 10: New club openings and yoga product
• SATS Hyllie Corner (Q2 2023) • SATS DN Skrapan (Q2 2023) • SATS Sluseholmen (Q3 2023) • SATS Karlaplan (Q3 2023) • SATS Skedsmokorset • SATS Triaden (Q3 2023) • SATS Hyllie • ELIXIA Ratina (Q4 2023) • SATS Kungsmässan (Q1 2024) • SATS Mölndal (Q2 2024) • SATS Haga Norra (2024) • SATS Hana • Fresh
Slide 11: Untapped earnings potential by improving club economics
Like-for-like profitability regained, but still untapped earnings potential by improving club economics Continue developing maturing clubs and signed greenfields, to reach target profitability Utilize the operational leverage and scale through club optimizations and overhead discipline Continue to e
Slide 12: Financial Review
FINANCIAL REVIEW RYT AY
Slide 13: Full run-rate effect from membership development
Full run-rate effect from membership development in H2 2022 Continued solid sales in Q1 2023 Strong yield development without any significant additional churn after price adjustments the past few months Cost discipline in operations Group-wide profitability program starting to yield returns, mainly
Slide 14: Member growth in Q1 2023
• Somewhat slower seasonality-adjusted member growth in Q1 2023 as a result of a price/volume trade-off • Continued solid sales in the quarter with less campaign activities compared to previous quarters • Fall-off also at a decent level considering the significant price increases affecting net growt
Slide 15: Price adjustments for memberships
• List prices for memberships and personal training adjusted 1 December 2022 • Avg. increase of 8% across the product portfolio, equivalent to NOK 45 per month • Inflation adjustment of memberships in accordance with the October 2022 CPIs (7.5-10.9%) with effect from January 2023 • Price increases f
Slide 16: Revenue progression
• Continued progression in revenues (+15% curr. adj.) mainly driven by membership revenue increasing by 20% (curr. adj) year-over-year • Slower personal training business due to fewer personal trainers both in SATS and in the industry overall, ending in line with last year • Retail sales in line wit
Slide 17: Operating costs and profitability program
Total operating costs (MNOK)1 - whereof like-for-like club costs - whereof overhead costs 2 (MNOK)1 • Cost base addressed through profitability improvement program, gradually coming into effect during 2023 • Energy costs are stabilizing, but continue to be higher than usual, at NOK 59 million in the
Slide 18: EBITDA development
• The strong operational performance over the past year and our actions to regain profitability have yielded results: • Focus on regaining the member base, with significant member growth during H2 2022 • Successful price adjustments of new and existing members • Group-wide profitability program impl
Slide 19: Capital expenditures
• Lower upgrades and maintenance capex in the quarter, as many maintenance activities are optimally planned to periods with lower activity at the clubs • Pipeline of six new clubs opening in 2023, but further expansion is still temporarily paused due to the current macroeconomic climate 19
Slide 20: Operating cash flow and liquidity
• Continue proving the cash generative ability with operating cash flow of NOK 100 • Satisfactory liquidity position to handle current million in the quarter operations and communicated expansion strategy, despite significant negative currency translation • Development in working capital affected by
Slide 21: Net debt and cash conversion
• Despite strong development in underlying cashflow, net debt is negatively impacted by currency effects in the quarter, with a NOK 48 million negative impact on total bank borrowings and a NOK 62 million negative impact on cash and cash equivalents • Historically, we have shown strong cash generati
Slide 22: Outlook
OUTLOOK RYT AY
Slide 23: Outlook: continued member growth and yield improvement
Expect continued member growth in the long term Yield improvement going forward mainly driven by new members on higher prices being rolling into the member base Continuing the journey toward healthy financials and healthy members, in line with the ambition outlined on the CMD in October 2022 Helping
Slide 24: Appendix
APPENDIX RYT AY
Slide 25: Norway
NORWAY " COUNTRY EBITDA BEFORE IMPACT OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) OF IFRS 16 (MNOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 322-325 «330 566 556 510309 482 22% me 124 82 Q12022 Q2.2022 Q3 2022 Q4 2022 Q12023 @12022 @1202
Slide 26: Sweden
SWEDEN " COUNTRY EBITDA BEFORE IMPACT OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) OF IFRS 16 (NOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES Il OTHER YIELD Il OTHER REVENUES +8% +15% (4% CURR. ADJ, (+11% CURR. ADS) 541 20% 457% (+51% CURR. ADJ), 81 a QI 2022 Q2 2022 Q3
Slide 27: Finland
FINLAND " COUNTRY EBITDA BEFORE IMPACT OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) OF IFRS 16 (MINOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES +678% (621% CURR. ADJ, [OTHER YIELD Il OTHER REVENUES 13% I GOVERNMENTAL SUPPORTING PACKAGE 441% +28% (427% CURR. ADS) (416%
Slide 28: Denmark
DENMARK " COUNTRY EBITDA BEFORE IMPACT OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) OF IFRS 16 (NOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 429% (+16% CURR. ADJ. 127 419% (+8% CURR ADI) 21 +161% (+153% CURR. ADJ.) 99 7 6% 106 8 a2 “2 18
Slide 29: Key figures Q1 2023 vs Q1 2022
Amounts in NOK million Q 1 2023 Q 1 2022 Number of clubs, EOP 274 267 Outgoing member base ('000s) 734 686 Average number of members per club 2 680 2 571 ARPM (NOK) 550 498 Yield (NOK) 440 381 Reported EBITDA (MNOK) 424 287 EBITDA before impact of IFRS 16 (MNOK) 137 30 EBITDA before impact of IFRS 1
Slide 30: IFRS 16 impact on Q1 2023
Re por te d C ha nge Exc l. I FRS 16 Amounts in NOK million Q 1 2023 I FRS 16 Q 1 2023 Ba la nc e she e t ite ms - I FRS 16 Property, plant and equipment 726 0 726 Right-of use assets 4 497 4 497 0 Deferred tax assets 246 76 170 Prepaid expenses and accrued income 292 -88 380 Tota l a sse ts 9 078 4
Slide 31: Definitions of key metrics
Average number of members per Consists of group services such as commercial functions, IT, finance and Outgoing member base divided by outgoing number of clubs Group overhead club administration Average revenue per member Calculated as monthly total revenue divided by the average member Leverage rat
Slide 32: Free cash flow reconciliation
Free cash flow Consolidated statement of cash flows EBITDA before impact of IFRS16 Profit before tax Depreciation, amortization and impairment Net financial items Installments on lease liabilities Interests on lease liabilities Maintenance capex Purchase of property, plant and equipment (contains bo
Slide 33: Health effect methodology
• Calculated health effect of all SATS members who meet WHO’s recommendation of minimum 75-100 minutes of vigorous-intensity aerobic physical activity per week at SATS alone (World Health Organization, 2022) • Midpoint of 87.5 minutes applied • Assuming an average of 60 minutes per SATS workout • Me
Slide 34: SATS
SATS