Slide 1: Q3 2023 Interim Report July-September 2023
Q3 2023 INTERIM REPORT JULY-SEPTEMBER 2023 CEO SONDRE GRAVIR CFO CECILIE ELDE INVESTOR RELATIONS: STINE.KLUND@SATS,NO, +47 98 69 9259
Slide 2: Clubs and members by Nordic country
119 clubs and 326 000 members (1%2) 95 clubs and 250 000 members (5%2) 2 32 clubs and 71 000 members (5%2) 29 clubs and 84 000 members (4%2) 4 3 1 5 11 24 66 Greater Oslo Greater Helsinki 11 3 10 73 11 Greater Stockholm 12 2 1 7 29 Greater Copenhagen 1) Measured by 2022 revenues based on figures fro
Slide 3: Strong financial delivery YTD
Strong financial delivery YTD with total revenues of NOK 3 507 million (+12% curr. adj.) and EBITDA1 of NOK 486 million (+279% curr. adj.) Steady member growth, significant yield increase and improvement in club utilization by increasing members per square meter, contributing substantially to improv
Slide 4: No signs of weakened consumer sentiment within gym memberships
No signs of weakened consumer sentiment within gym memberships, which Somewhat slower additional sales, is the core business, constituting ∼80% of revenues constituting ∼20% of revenues Average membership price PT and retail revenues Sales of new memberships: (curr. adj.) for: (curr. adj.): Higher m
Slide 5: Higher activity level per member
Δ Δ Δ • The combination of more members and the higher activity level per member drives the activity level up • The trend in the third quarter is consistent with the first half of the year, indicating a positive shift in loyalty in the member base • Group training up 26% compared to last year, in co
Slide 6: Robust megatrends driving activity levels and higher 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 6 Please see appendix for methodology
Slide 7: Long-term outlook remains; short-term focus on core business
• The long-term outlook remains: • The fitness industry does not look fundamentally different than it did prior to the pandemic • SATS’ long-term strategy remains • The company’s club portfolio is stronger than at the IPO, possessing significant potential and untapped EBITDA capacity • However, shor
Slide 8: Earnings potential of filling up clubs with more members
• With high a drop-through from membership revenue to EBITDA of ~90%, the earnings potential of filling up clubs with more members is significant • Still ample room for growth beyond pre-covid level in terms of members per club, optimizing visits per sqm as key performance metric • Most important le
Slide 9: Members per club and members per sqm
• Still behind pre-pandemic levels in terms of members per club, but utilizing the total rented space better, with more members per sqm • Opening slightly smaller clubs than the average in the base due to higher space utilization, as well as downsizing clubs with spare capacity • Still significant u
Slide 10: SATS Nationaltheateret club refurbishment and relocation
• Refurbished during the Summer to achieve a fresh look and feel, as • Relocated in December 2022 to improve micro-location in terms of well as an attractive equipment mix, based on usage data availability and visibility, as well as upgraded facilities • Removed group training rooms to facilitate mo
Slide 11: Club openings and upgrades
• ELIXIA Ratina (Q4 2023) • SATS Sluseholmen (Q1 2024) • SATS Karlaplan • SATS Kungsmässan (Q1 2024) • SATS Triaden • SATS Mölndal (Q3 2024) • SATS Haga Norra (Q3 2024) 11 11
Slide 12: Q3 achievements
Members per sqm +4% vs Q3 2022 and Increased the utilization of the existing club portfolio +2% vs Q3 2019 Lifted prices to counteract inflation and realize potential Yield +6% (curr. adj.) vs Q3 2022 willingness-to-pay Demonstrated strong cost discipline and executed an effective Total operating co
Slide 13: Way forward: improve efficiency, grow members, reduce debt
We will further improve club efficiency and our subscription-based business model provides predictability for revenues and time to adapt to changes, if necessary We will continue to grow the member base and members per club, growing our financial results and cash generation due to high operational l
Slide 14: Financial Review
FINANCIAL REVIEW RYT AY
Slide 15: Resilient member base with steady growth
• Resilient member base in a challenging macro environment with steady member base growth the past year • Net growth of 16 000 members is seasonally strong despite being behind tough comparable numbers for last year • Members per club at healthy levels, but still potential for further growth by opti
Slide 16: ARPM improvement driven by membership yield increase
• ARPM improvement mainly driven by membership yield increase after price adjustments during the winter • 6% curr. adj. membership yield increase implies a membership yield-driven revenue improvement in the quarter of 50 million • Seasonally higher freeze during summer months temporarily reduce memb
Slide 17: Solid revenue development of 11% (curr. adj.)
• Solid revenue development of 11% (curr. adj.), in line with the YTD development • The member revenue increase of 11% (curr.adj.) in the quarter and 16% YTD is an important proof point of our ability to build member base and charge a fair price for memberships • Moderate growth in other revenues wi
Slide 18: Cost reduction driven by profitability improvement program
• Cost reduction driven by initiatives from profitability improvement program, mainly reducing costs related to salaries, marketing and rent • Total operating cost is down 3% (curr. adj.), partly driven by: • Lower direct costs following lower additional sales • Electricity costs down NOK 28 million
Slide 19: Q3 built on a strong H1 with EBITDA growth
• Q3 built further on a strong H1, showing significant and accelerating performance momentum across the Group • Strong financial delivery with EBITDA before IFRS 16 of NOK 155 million in the quarter and 486 million YTD • Costs continue to be well controlled, leading to drop through of growing revenu
Slide 20: Capex development
• Lower upgrades and maintenance capex in H1 due to a precautionary spending approach • Lower upgrades and maintenance capex in Q3 mainly due to delay of some Q3 projects, expected to be implemented in Q4 • Two new clubs opened in Q3 • Going forward, we will increase investments in our existing club
Slide 21: Operating cash flow and free cash flow
• Operating cash flow of NOK 139 million in the quarter and free cash flow of 81 million • Positive working capital effects following the growing business with prepayment of memberships • LTM Operating cash flow of 361 million and cash conversion of 80% shows that our cash-generating ability is reco
Slide 22: Liquidity position improved
• Liquidity position improved with 121 million from Q2 after positive free cash flow and currency effects in the quarter • Satisfactory liquidity position to handle current operations and communicated expansion strategy 22 1) Liquidity includes cash balance and undrawn revolving credit facility
Slide 23: Strong deleveraging
• Strong deleveraging driven by improved earnings and cash generation, expected to continue throughout the remainder of the year and onwards • Historically, we have shown strong cash generation capabilities and stable cash conversion, resulting in a strong deleveraging profile • Covenant waiver of t
Slide 24: Outlook
OUTLOOK RYT AY
Slide 25: Outlook for Q4 and H2 2023
Membership sales and churn in Q4 developing according to plan but expect slightly negative net growth in the quarter. Normal sales but somewhat higher churn after high volume growth H2 2022 Continuing exploiting the unleashed potential to increase member utilization in the existing club portfolio Fo
Slide 26: Appendix
APPENDIX RYT AY
Slide 27: 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 re Cir) 531 514 Hoa 28% 15% 146 410 443 72 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q3 2022 Q3 20
Slide 28: Sweden
SWEDEN " COUNTRY EBITDA BEFORE IMPACT OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) OF IFRS 16 (NOK) Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 I MEMBERSHIP YIELD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES +8% (+5% CURR. ADJ), 492 23% +14% (+12% CURR. ADJ.) 14% 7
Slide 29: 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 Hi MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 426% (+11% CURR. ADJ), 71 (+3% CURR. ADJ.) 109 @ 14% 515 439 72 86 7 443 368 C4 @3 2022 @4 20
Slide 30: 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 84 84 4 (6% CURR. ADJ.) 7 97 18 15 98 82 Q3 2022 Q4 2022 QI 2023 Q2 2023 Q3 2023 Q3 2022 Q3 2023
Slide 31: Key figures table
Amounts in NOK million Number of clubs, EOP 275 275 Outgoing member base ('000s) 731 708 Average number of members per club 2 658 2 573 ARPM (NOK) 510 468 Yield (NOK) 426 388 Reported EBITDA (MNOK) 445 281 EBITDA before impact of IFRS 16 (MNOK) 155 20 EBITDA before impact of IFRS 16 margin 14% 2% Co
Slide 32: IFRS 16 impact on balance sheet and income statement
Amounts in NOK million Property, plant and equipment 674 0 674 Right-of use assets 4 423 4 423 0 Deferred tax assets 243 75 168 Prepaid expenses and accrued income 234 -87 321 T otal as s ets 9 009 4 412 4 598 Eq uity 1 022 -3 4 3 1 365 Non-current lease liability 3 878 3 878 0 Current lease liabili
Slide 33: Definitions
Adjusted EBITDA before EBITDA adjusted for (i) closed clubs; (ii) certain comparability items; and Group overhead Consists of group services such as commercial functions, IT, finance and impact of IFRS 16 (iii) the impact of implementation of the IFRS 16 lease standard administration Average number
Slide 34: Cash flow items definitions
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 both maintenance capex and expansion capex) Working ca
Slide 35: 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 36: SATS
SATS