Sats Asa · OSL:SATS
Sats Asa — Q3 2019 Earnings Presentation
33 slides from Sats Asa's earnings presentation, Nov 8, 2019
Slide 1: Q3 2019 Interim Report January - September 2019
Q3 2019 INTERIM REPORT JANUARY - SEPTEMBER 2019 8 NOVEMBER 2019
Slide 2: #1 position in Norway, Sweden, Finland; #2 in Denmark
#1 position1 with 102 clubs and 298 000 members (+5%2) #1 position1 with 78 clubs and 228 000 members (+7%2) 2 #1 position1 with 29 clubs and 62 000 members (+4%2) #2 position1 with 39 clubs and 99 000 members 4 1 3 1 4 9 21 58 Greater Oslo 10 3 Greater Helsinki 5 61 6 4 Greater Stockholm 10 1 1 1 1
Slide 3: Acquisitions and greenfield openings in Q3 2019
• Acquisition of fitness dk completed adding 39 clubs with a strong cluster in the Greater Copenhagen area • Two fill-in acquisitions and one greenfield by Q3: • Oslo: FitnessXpress – 3 clubs • Stockholm: Gym & Motion – 3 clubs • Bergen: Greenfield opened in September • Two additional greenfield ope
Slide 4: Flexible pay for what you need pricing model
• Flexible “pay for what you need” pricing model introduced in January 2017 with lower entry price point to improve competitive positioning • Strong base to attract more members and drive up-selling • New membership prices consistently improving and overtaking base prices • Base price for existing m
Slide 5: Physiotherapy, massage and nutrition counselling pilots
• Pilot offering within physiotherapy and sports massage launched at SATS CC Vest, Nesttun and Akersgata • Following the business model CC Vest pic(s) developed in Sweden • Building in-club treatment rooms • 1-2 physiotherapists / massage therapists per treatment room • In September pilots of 1:1 nu
Slide 6: SATS app drives member satisfaction and stickiness
▪ Program overview Access to both GX and 370 000 users – 60% of the members ▪ Filtering (e.g. clubs, classes) PT offering ▪ Direct PT booking Implementation of QR codes to drive app penetration ▪ Automatic session logging 36% have one or more social relation Full track of sessions ▪ Activity overvie
Slide 7: New club openings and pipeline
• Opened on 21 September • 1,800 sqm • Presale: 850 members (now: 1,200) • Large group exercise room, Build’n Burn concept and Indoor Running offering • Scheelegatan, Stockholm (opened Q4) • Danmarksplass, Bergen (Q4 19) • Tapiola, Helsinki (Q1 20) • Ursvik Entré, Stockholm (Q1 20) • Häggvik, Stockh
Slide 8: Denmark: fitness dk acquisition and turnaround
Members (‘000) 99 Total revenue (MNOK) 377 SATS entered the Danish fitness market by the acquisition of fitness dk in January 2019 ARPM (NOK) 417 Rebranding to SATS and Back-end cost reductions launch of full offering Adjusted country EBITDA before Period of poor performance and -33 impact of IFRS 1
Slide 9: Growth drivers: existing clubs and new clubs
Membership yield growth through pricing Existing Clubs: Personal training Continued growth in mature and maturing clubs Retail revenue New Clubs: In-fill acquisitions and greenfield openings Cross-selling of adjacent products & services Operating leverage driving high drop- through of incremental re
Slide 10: Financial Review
FINANCIAL REVIEW SATSGROUP
Slide 11: Investment highlights
High drop-through of growth in Broad geographic exposure to Continued volume growth existing clubs and stable Nordic countries across portfolio other revenue Maintenance and expansion capex discipline Diversified revenue structure with Positive momentum in yield and Profitable and efficient club 21%
Slide 12: Revenue improvement driven by members and ARPM
• Solid revenue improvement compared to last year driven by both member growth and improved ARPM • Increased yield and increase in sale of personal training and retail, driven by successful campaigns, improved product offering and member activation 12
Slide 13: Adjusted country EBITDA by country
• Norway, Sweden and Finland show continued strong development in adjusted country EBITDA and improved margins as a result of operating leverage • As expected, Denmark has a negative impact on the Q3 2019 result, with a negative adjusted country EBITDA of 16 MNOK 13
Slide 14: Capital expenditures
• Maintenance capex1 YTD of 162 MNOK (5.4% of revenues), slightly higher than historical averages and expectations for coming years • Full year maintenance capex remains in line with expected levels communicated at IPO (~225 MNOK) • Step-up in club portfolio investments partly driven by acquisition
Slide 15: Net debt and leverage
~ ~ • Slight increase in net debt compared to last year after acquiring fitness dk • Leverage stable at 2.9x • IPO proceeds has reduced net debt to ~1 100 MNOK and the leverage ratio to the communicated target of ~ 2.0x 15 (1) Net debt divided by last twelve months adjusted EBITDA before impact of I
Slide 16: Cash conversion
• Cash conversion YTD at 61%, slightly down from 74% in 2018 • Decrease in cash conversion as a result of negative contribution from Denmark, increased maintenance CAPEX LTM due to major upgrades in Denmark and increased IT investments 16
Slide 17: Outlook
Continued volume growth, yield expansion and growth in other revenues. We expect H2 to be more balanced relative to H1 in EBITDA* generation in 2019 compared to previous years. Continue to strengthen cluster position through new club openings and M&A. Increased focus on digital capabilities and prod
Slide 18: Q&A
dNOAISLVS Q&A
Slide 19: Disclaimer
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 inhe
Slide 20: Appendix
dNOAISLVS APPENDIX
Slide 21: Members and ARPM
MEMBERS AND ARPM OUTGOING MEMBER BASE (000) Qs 18 a4 18 Qiig Q219 Q319 ARPM AND YIELD (NOK/MONTH) : a ig ME vio . ’ OTHER YIELD \ : a ¥
Slide 22: Norway revenues and EBITDA
NORWAY REVENUES AND EBITDA TOTAL REVENUES (MNOK) I MEMBERSHIP REVENUES 7%) I OTHER REVENUES 1359 Qs 18 Q319 YTD 18 YTD I9 ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 MNOK — MARGIN 23% 21%__—— 22 SATSGROUP
Slide 23: Members and ARPM
MEMBERS AND ARPM OUTGOING MEMBER BASE (000) +7%, > 214 223 228 227 228 a3 18 0418 ang a219 a319 ARPM AND YIELD (NOK/MONTH) MM veto OTHER YIELD f ' 431 447 466 474 f ‘ ; Qsie Q319 YTD 18 YTD I9
Slide 24: Sweden revenues and EBITDA
SWEDEN REVENUES AND EBITDA TOTAL REVENUES (MNOK) I MEMBERSHIP REVENUES I OTHER REVENUES 27 506 Qs 18 Q319 YTD 18 YTD I9 ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 MNOK — MARGIN 51% 5% 28% 28% ee % 270 248 318 @319 v1D 18 vTD19 SATSGROUP
Slide 25: Finland members and ARPM
FINLAND ag Elk or : OUTGOING MEMBER BASE (000) Q4 18 Qiig Q219 ARPM AND YIELD (NOK/MONTH)
Slide 26: Finland revenues and EBITDA
FINLAND REVENUES AND EBITDA TOTAL REVENUES (MNOK) I MEMBERSHIP REVENUES I OTHER REVENUES YTD 18 YTD I9 ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 NOK MILLION — MARGIN N% me ___ PT . -. Qsie Q319 YTD 18 YTD I9 SATSGROUP
Slide 27: Members and ARPM
MEMBERS AND ARPM ~ OUTGOING MEMBER BASE (000) is - Hi a 7 4 Qs 18 Qiig Q219 Q319 ARPM AND YIELD (NOK/MONTH) MM veto OTHER YIELD 407
Slide 28: Denmark revenues and EBITDA
DENMARK REVENUES AND EBITDA TOTAL REVENUES (MNOK) ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 Hl MEMBERSHIP REVENUES Wl ox I OTHER REVENUES 377 Jai Qsie Q319 Qsie Q319 YTD 18 YTD I9 28 SATSGROUP
Slide 29: Alternative performance measures 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, impact of IFRS 16 overhead and cost allocations EBITDA depreciation and amortization Adjusted country EBITDA before Adjusted country EBITDA b
Slide 30: Key figures
Q3 2019 Q3 2018 YTD 2019 YTD 2018 FY 2018 Number of clubs, EOP 248 199 248 199 203 Outgoing member base ('000s) 687 557 687 557 569 Average member base ('000s) 687 558 679 559 555 Average number of members per club 2 770 2 806 2 736 2 808 2 736 ARPM (NOK) 455 449 483 478 489 Yield (NOK) 377 370 386
Slide 31: IFRS 16 impact
Balance sheet items - IFRS 16 • SATS implemented IFRS 16 using the full retrospective approach. As Reported Change Excl. IFRS 16 Amounts in NOK million 9/30/2019 IFRS 16 9/30/2019 such, 2018 financial information is required to be restated in these financial statements. The impact of the new lease s
Slide 32: Balance sheet
(Amounts in NOK million) 30.09.2019 Non-current assets Non-current intangible assets 2 460 Right-of use asset 3 641 Other non-current assets 965 Total non-current assets 7 067 Current assets Change in cash on balance resulting from the net effect of i) Other current assets 442 debt refinancing / dow
Slide 33: SATSGROUP
SATSGROUP