Sats Asa · OSL:SATS
Sats Asa — Q1 2024 Earnings Presentation
48 slides from Sats Asa's earnings presentation, March 2024
Slide 1: Q1 2024 Interim Report January-March 2024
QI 2024 INTERIM REPORT JANUARY-MARCH 2024 CEO SONDRE GRAVIR CFO CECILIE ELDE INVESTOR RELATIONS: JONAS.SORTLAND FOUGNER@SATS.NO +4794 8058 51
Slide 2: Clubs and members by region
118 clubs and 331 000 members 96 clubs and 248 000 members 2 33 clubs and 72 000 members 29 clubs and 84 000 members 4 4 5 11 24 66 Greater Oslo Greater Helsinki 11 3 10 73 11 Greater Stockholm 13 2 1 7 29 Greater Copenhagen 1) Before IFRS 16 and EO items 2) Measured by 2023 revenues based on figure
Slide 3: All time high revenue and profit
All time high revenue and profit Investments in strengthening the product offering continue to drive member engagement… …allowing us to increase yield Solid cashflow and continued high-paced deleveraging, reaching communicated target range at 2.0x 1) Before IFRS 16 3 3 3) Net debt to EBITDA before I
Slide 4: Prioritizing employees, product offering, clubs and locations
We prioritize having the best The offering make it easier for our employees, most compelling members to succeed with their and wide product offering, training and maintain a sustainable market-leading clubs, and activity level, evidenced by top-notch locations increased activity By attracting new an
Slide 5: Continued increase in activity levels
• Continued increase in activity levels versus record-high Q1 2023 comparables, driven by increase in membership numbers and higher activity levels per member • The trend in the first quarter is consistent Δ with earlier years, as the total number of workouts at SATS’ clubs is up 24% versus Q1 2019,
Slide 6: Tight club footprints enable optimization of product and class schedules
• Tight club footprints in large • Fast follower of fitness cities enables optimization trends through central of product types and class product innovation function schedules between clubs • High utilization of group • In-house production of training areas due to scale concepts, not dependent of of
Slide 7: Group training members stay longer
• Group training members stay longer than non-group training members and it is therefore important to continue improving our offering • SATS boasts a robust competitive edge with its cost-effective group training concepts, benefiting from economies of scale and rapid time-to-market 7 7
Slide 8: Continued progression in membership yield
CONTINUED PROGRESSION IN MEMBERSHIP YIELD THROUGH IMPROVING OUR PRODUCT OFFERING AND FINETUNING PRICING TOTAL MEMBERSHIP YIELD AVERAGE NMU PRICE NOK NOK 8.0%, 475 525 Q12023 Q12024 Q12023 Q12024
Slide 9: Fitness club-based exercise is key to increasing public activity
• Fitness club-based exercise is key to driving further increase in public activity levels and realizing untapped socio-economic benefits • The share of fitness club users among those who exercise regularly is continuing to increase, while the share of home and outdoor users are declining • 46% of a
Slide 10: Robust megatrends driving activity levels and health awareness
~ ~ Robust megatrends driving SATS helping members activity levels and higher health succeeding with their awareness training Higher fitness membership penetration among younger generations - expected to keep those habits through life 10 10 See appendix for the methodology on calculating the public
Slide 11: Financial Review Q1 2024
FINANCIAL REVIEW Q12024 2 ME a)
Slide 12: Before IFRS 16 net debt to EBITDA
1) Before IFRS 16 2) Net debt to EBITDA before IFRS 16 12 12
Slide 13: Positive net growth in member base
• Positive net growth in member base, somewhat below Q1 2024 due to price/volume trade-off - Solid sales with less campaign activity than previous quarters - Somewhat elevated fall-off due to price increases, in line with expectations • Continued tuning of club portfolio to optimize profitability an
Slide 14: Price adjustments for memberships and personal training
• List prices for memberships and personal training adjusted 1 December 2023 • Avg. increase of 8% across the membership product portfolio, equivalent to NOK 50 per month • Inflation adjustment of memberships in accordance with the October 2023 CPIs (4.0-6.5%) with effect from January 2024 • Price i
Slide 15: Total revenue growth of 8%
• Total revenue growth of 8% compared to Q1 2023 is driven by both increased average revenue per member and growth in members • The membership revenue increase of 9% in the quarter is an important proof point of our ability to build member base and charge a fair price for memberships • Other revenue
Slide 16: Well controlled cost base
• Well controlled cost base, up 4.7% compared to last year, mainly driven by inflation • Lower direct costs following lower additional PT and retail sales • Temporarily higher personnel cost in the quarter due to extraordinary internal gathering for all staff • Cost base expected to increase in line
Slide 17: Improved revenue performance boosts profitability, EBITDA +27%, EBIT +61%
THE IMPROVED REVENUE PERFORMANCE CONTRIBUTES TO A SUBSTANTIAL BOOST IN PROFITABILITY COMPARED TO LAST YEAR, EBITDA +27% AND EBIT+61% REPORTED EBITDA EBITDA BEFORE IFRS 16 EBIT BEFORE IFRS 16 MNOK MNOK MNOK Wi ceitpa (EBITDA BEFORE IFRS 16 = EBIT BEFORE IFRS 16 MARGIN — EBITDA MARGIN = EBITDA BEFORE
Slide 18: Illustration of future potential
~ Deep-dive on the following pages This illustration of future potential does not relate to any specific time frame and should not be taken as a profit forecast in any way 18 18
Slide 19: Mature clubs perform above average
• The 250 mature clubs performs 9% above average for all clubs in terms of Club EBITDA, indicating untapped potential as the newest clubs mature • New clubs result in a short-term profit drag in the maturing phase, as the cost base required to operate the club is largely fixed • Therefore, as the ne
Slide 20: Continuously work with product offering across clusters and clubs
Continuously work with product offering to make our clusters, as well as single clubs, more attractive for existing and potential members Upgrade or relocate clubs to improve club quality and/or micro- location of club Optimize club layout and equipment mix to facilitate more members per square mete
Slide 21: Club openings, closures and capex
Kungsmässan (Q1 2024) • Two new clubs opened and two club Sluseholmen (Q1 2024) closures in the quarter Mölndal (Q3 2024) • Two Greenfields planned for 2024 Haga Norra (Q3 2024) Lillehammer (Closed Q1 2024) Rødovre (Closed Q1 2024) • Moderate level of upgrades and maintenance capex in the quarter, a
Slide 22: Operating cash flow and free cash flow
• Operating cash flow of NOK 154 million in the quarter and free cash flow of 131 million • Positive working capital effects following the growing business with prepayment of memberships • LTM Operating cash flow of 524 million and cash conversion of 79% shows that our cash-generating ability is rec
Slide 23: Liquidity improved and leverage down to 2.0x
• Liquidity position improved by 98 million, despite negative currency effects • Solid cash generation leaves room for repayment of debt, 100 MNOK in the quarter • Improved earnings and cash generation results in high-paced deleveraging from 6.7x last year to 2.0x in Q1 2024 • Maintain a stable leve
Slide 24: TLE]
TLE] NT Le ALLEL Ll UT ay aE tii
Slide 25: Strengthened product offering enables volume and ARPM growth
Strengthened member product offering enables volume and ARPM growth, fueling revenue going forward Still unleashed potential in existing club portfolio driven by sqm and equipment optimization and increased operational efficiency… …as a key driver for improved financial performance, accelerated by o
Slide 26: Appendix
APPENDIX
Slide 27: Norway
NORWAY COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 000 NOK/MONTH MNOK MNOK [ll MEMBERSHIP YIELD [lll MEMBERSHIP REVENUES WM OTHER YIELD I OTHER REVENUES 5300-519. 326 526.531 566 583 556 575 156 103 Ng m 124 Q12023 Q22023 Q32023 Q4 2023 Q12024 Q12023 Q1
Slide 28: Sweden
SWEDEN COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 000 NOK/MONTH MNOK MNOK [ll MEMBERSHIP YIELD [lll MEMBERSHIP REVENUES WM OTHER YIELD I OTHER REVENUES Q12023 Q22023 Q32023 Q42023 Q12024 581 +8%, , 2 435 541 400 Za Te 15 a5 012023 012024 012023 012024
Slide 29: Finland
FINLAND COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 000 NOK/MONTH MNOK MNOK Il MEMBERSHIP YIELD [lll MEMBERSHIP REVENUES WM OTHER YIELD I OTHER REVENUES —_o— , @ +8%, ~40% 72 70 7 71 72 586 126 15 555 7 21 23 9 Q12023 Q22023 Q32023 Q4 2023 Q12024 Q12023
Slide 30: Denmark
Other revenues affected by extraordinary revenue from received delayed covid compensation (18 MNOK) 30
Slide 31: Key figures
Amounts in NOK million Number of clubs, EOP 276 274 Outgoing member base ('000s) 736 734 Average number of members per club 2 667 2 680 ARPM (NOK) 588 550 Yield (NOK) 477 448 Reported EBITDA (MNOK) 475 424 EBITDA before impact of IFRS 16 (MNOK) 174 137 EBITDA before impact of IFRS 16 margin 13 % 11
Slide 32: IFRS 16 impact on balance sheet and income statement
Property, plant and equipment 685 0 685 Right-of use assets 4 680 4 680 0 Deferred tax assets 179 73 106 Prepaid expenses and accrued income 213 -99 311 Total assets 9 129 4 654 4 474 E qui ty 1 100 -360 1 459 Non-current lease liability 4 105 4 105 0 Current lease liability 947 947 0 Other current
Slide 33: Definitions
EBITDA adjusted for (i) closed clubs; (ii) certain Adjusted EBITDA before impact Consists of group services such as commercial comparability items; and (iii) the impact of Group overhead of IFRS 16 functions, IT, finance and administration implementation of the IFRS 16 lease standard Average number
Slide 34: Operating cash flow reconciliation
Profit before tax Depreciation, amortization and impairment EBITDA before impact of IFRS16 Net financial items Installments on lease liabilities Interests on lease liabilities Maintenance capex Purchase of property, plant and equipment (contains both maintenance capex and expansion capex) Change in
Slide 35: Methodology for calculating public health effect
• 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 36: Why invest in SATS?
ee S/N —— &- “ ES < i aN | i Me " q iq TS en ee WHY INVEST IN Hy ea ‘Wil SATS? h » IP er \ /
Slide 37: Clubs and members by region
118 clubs and 331 000 members 96 clubs and 248 000 members 2 33 clubs and 72 000 members 29 clubs and 84 000 members 4 4 5 11 24 66 Greater Oslo Greater Helsinki 11 3 10 73 11 Greater Stockholm 13 2 1 7 29 Greater Copenhagen 1) Before IFRS 16 and EO items 2) Measured by 2023 revenues based on figure
Slide 38: Making our members healthier and happier
SATS HAS A MAKING OUR MEMBERS HEALTHIER AND HAPPIER 1 2 3 WIDE UNPARALLELED COVERING PRESENCE THROUGH HELPING MEMBERS ALL TRAINING NEEDS SUCCEED WITH THEIR TRAINING PDI ED BY 4 LEADING DATA AND INSIGHTS SUPPORTING GQ INSIGHTS AND INFORMED DECISION-MAKING STAFF ; 5 PROVEN OPERATING MODEL AND ENGAGED
Slide 39: Prioritizing employees, product offering, clubs and locations
We prioritize having the best The offering make it easier for our employees, most compelling members to succeed with their and wide product offering, training and maintain a sustainable market-leading clubs, and activity level, evidenced by top-notch locations increased activity By attracting new an
Slide 40: Club experience and offering
Manned reception welcoming and Well-equipped fitness floor with the Personal guidance and training Wide offering of group exercise helping members with a well- broadest equipment mix in the programs to members on the fitness classes enabling members to find a equipped retail area Nordics floor class
Slide 41: Tight club footprints enable optimization of product and class schedules
• Tight club footprints in large • Fast follower of fitness cities enables optimization trends through central of product types and class product innovation function schedules between clubs • High utilization of group • In-house production of training areas due to scale concepts, not dependent of of
Slide 42: Equipment usage monitoring and optimization
• Continuous monitoring of equipment usage in our • Insight based, up to date equipment lists and standardized club largest clubs using sensors layout • Regular feedback from members regarding range • Asset registry designed to help identify possible equipment swaps and availability of equipment bet
Slide 43: Unique option to work out where members live, work and travel
• Members get a unique option to workout where they live, work and travel • Differentiated product offerings on clubs gives members access to a wide product offering including HIIT, Hot Yoga, Indoor running, Cycling, Sauna, Fitness floor and regular Childcare fitness floor and more group training in
Slide 44: Digital member engagement and onboarding
• Branched onboarding first 9 • Invite friends to join workout • Re-book same class next weeks, based on members or class week activity • Let friends know about • Scheduled your own workouts • Tools to succeed with their scheduled workouts or in app training and displaying booked group classes • Wai
Slide 45: Data-driven scheduling and personalization
• Centralized scheduling model • Demography, population, travel • Live segmentation of all members used allocating the GX schedule to optimize distance and competitor data for personalized communication and number of average show-ups per class leveraged for sourcing the best club triggered customer
Slide 46: Proven operating model
Automated scheduling tool Standardized process for optimizing total labor hours measuring member and role composition based satisfaction and prioritizing on visit forecasts and improvement efforts member satisfaction accordingly Streamlined routine-lists and Annual audit across portfolio manuals acr
Slide 47: Capital allocation: investment, leverage and shareholder returns
Ongoing investment in physical and Investing in high-returning growth Sensible leverage with excess cash digital product to maintain outstanding opportunities returned to shareholders member experience Prioritize investing in existing clubs to Prioritizing to reduce debt, reducing increase club capa
Slide 48: SATS
SATS