Sats Asa · OSL:SATS
Sats Asa — Q3 2024 Earnings Presentation
41 slides from Sats Asa's earnings presentation, September 2024
Slide 1: Q3 2024 Interim Report July-September 2024
Q3 2024 INTERIM REPORT JULY-SEPTEMBER 2024 CEO SONDRE GRAVIR CFO CECILIE ELDE INVESTOR RELATIONS: STINE. KLUND@SATS.NO +4798 699259
Slide 2: Clubs and members by city
117 clubs and 329 000 members 96 clubs and 246 000 members 2 31 clubs and 70 000 members 29 clubs and 83 000 members 4 4 5 11 22 66 Greater Oslo Greater Helsinki 10 3 10 73 11 Greater Stockholm 14 2 7 29 Greater Copenhagen 1) Before IFRS 16 and EO items 2 2
Slide 3: Third quarter highlights
Consistently improving revenues, with third quarter total revenues up by 8 percent (5 percent curr. adj.) to NOK 1 194 million, primarily driven by successful yield enhancing initiatives Delivering a record-high third quarter EBITDA1 of NOK 170 million and EBIT1 of NOK 127 million, up 10 and 29 perc
Slide 4: Prioritizing a wide product offering and market-leading clubs
We prioritize having the most The offering make it easier for our compelling and wide product members to succeed with their offering, market-leading clubs, training and maintain a sustainable best employees and top-notch activity level, evidenced by locations increased activity By attracting new and
Slide 5: Stimulating the growing group training trend
• Stimulating the growing group training trend by expanding the schedule and launching innovative new products • Thus, shifting some of the workouts from the gym floor to the group training rooms, which makes strategically sense due to higher member satisfaction and loyalty among group training memb
Slide 6: Investing in our group training product
INVESTING IN OUR GROUP TRAINING PRODUCT TO FURTHER BOOST THE ATTRACTIVENESS OF THE PRODUCT .AND DEVELOPING THE GROUP TRAINING PORTFOLIO THROUGH LAUNCHING A ADDING ON TO THE GROUP TRAINING SCHEDULE... WELLNESS BUNDLE [lll # OF GROUP TRAINING CLASSES (‘000) way? WHAT? 4) WE SEE ANINCREASED FOCUS ON ME
Slide 7: Relaunch of clubs
“Relaunch of clubs”, normally including all maintenance categories Adding new group training products to engage more members and Optimizing equipment mix and adding more equipment to improve incorporate new fitness trends the capacity utilization in our clubs Maintaining the SATS look and feel throu
Slide 8: Lifting the quality of our clubs further
LIFTING THE QUALITY OF OUR CLUBS FURTHER 76 CLUBS TO BE UPGRADED DURING 2024 33 B26 So 7 Pio
Slide 9: Financial Review Q3 2024
FINANCIAL REVIEW Q3 2024
Slide 10: 1) Before IFRS 16 2) Net debt to EBITDA before IFRS 16
1) Before IFRS 16 2) Net debt to EBITDA before IFRS 16 10 10
Slide 11: Price/volume trade-off with higher yield increase than member base
• We continue to see the effects of price/volume trade-off with higher increase in yield than member base • Flat member development compared to last year, mainly driven by club closures • Continued portfolio tuning keeps lifting members per sqm 11 11
Slide 12: Membership yield growth driven by price adjustments
• Membership yield growth driven by successful price adjustments, as well as positive development in membership mix for new members with higher yield per membership • Total revenues lifted by 5% y/y currency adjusted, as a stable member development is combined with yield increases above inflation •
Slide 13: Increase in club operating cost driven by inflation
• Increase in club operating cost of 7% (+4% currency adjusted), driven by inflation • Some additional investments in the product offering, mainly related to adding more group training classes, as communicated in the previous quarterly presentations • Hedged the electricity price for ∼50% of the tot
Slide 14: Revenue-driven profitability improvement
REVENUE-DRIVEN PROFITABILITY IMPROVEMENT REPORTED EBITDA EBITDA BEFORE IFRS 16 MNOK MNOK Mi cerTDA [EBITDA BEFORE IFRS 16 — EBITDA BEFORE IFRS 16 MARGIN — EBITDAMARGIN EBIT BEFORE IFRS 16 MNOK — EBIT BEFORE IFRS 16 MARGIN ( EBIT BEFORE IFRS 16 14% 14% 11% —_— 9% 170 155 127 98 Q32023 Q32024 Q32023 Q
Slide 15: Club openings, closures and maintenance capex
2 clubs Sweden Q3 2024 • Two club openings and three club Helsinki Q1 2025 closures in the quarter Oslo (Fresh Fitness) Q1 2025 • Working on ramping up the club Oslo Q3 2025 expansion pipeline Larvik (Fresh Fitness) Q3 2025 2 clubs Sweden Q3 2024 Helsinki Q3 2024 Gothenburg Q4 2024 • Maintenance cap
Slide 16: Free cash flow in the quarter
• Free cash flow in the quarter negatively affected by timing of payments related to quarterly rent, as communicated in the Q2 presentation (NOK 85 million) • Adj. operational cash flow is NOK 107 million (63%) and adjusted free cash flow is NOK 79 million • LTM Operating cash flow of NOK 493 millio
Slide 17: Stable underlying liquidity development in the quarter
• Stable underlying liquidity development in the quarter • Negative cash effect from the weakened NOK (-52 million), as well as working capital effects from last quarter (-85 million) is driving net debt and leverage up a notch compared to Q2 • Expect continued deleveraging in the medium term, aimin
Slide 18: Outlook
OUTLOOK
Slide 19: Outlook: group training investments and capital returns
Investments in the group training offering expected to improve the value proposition towards members and strengthen the competitive advantage Still unleashed potential in existing club portfolio driven by sqm and equipment optimization and increased operational efficiency… …as a key driver for impro
Slide 20: Appendix
APPENDIX
Slide 21: Forward-looking statements
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 22: Norway
NORWAY COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 ‘000 NOK/MONTH MNOK MNOK (MEMBERSHIP YIELD [MEMBERSHIP REVENUES 326 326 331 324 329 Q32023 Q42023 Q12024 Q22024 Q32024 WM OTHER YIELD eo 531 88 544 7% I OTHER REVENUES pr eo 514 533 4 161 146 32023 3202
Slide 23: Sweden
SWEDEN COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 ‘000 NOK/MONTH MNOK MNOK (MEMBERSHIP YIELD [MEMBERSHIP REVENUES 250 249 «248 = 244 246 Q32023 Q42023 Q12024 Q22024 Q32024 WM OTHER YIELD +12% (+5% CURR. ADJ) 492 I OTHER REVENUES +11%, (#4% CURR. ADJ.)
Slide 24: Finland
FI LAND COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 “000 NOK/MONTH MNOK MNOK [M MEMBERSHIP YIELD [MM MEMBERSHIP REVENUES 7 7 72 70 «70 Q32023 Q42023 Q12024 Q22024 Q32024 I oner viELD 19% (+5% CURR. ADJ.) 514 Il OTHER REVENUES 19% (+6% CURR. ADJ.) -29% (
Slide 25: Denmark
DENMARK COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE ARPM AND YIELD TOTAL REVENUES IMPACT OF IFRS 16 ‘000 NOK/MONTH MNOK MNOK (MEMBERSHIP YIELD [MEMBERSHIP REVENUES a 85 ggg Q32023 Q42023 Q12024 Q22024 Q32024 WM OTHER YIELD +20% (+16% CURR. ADJ.) 470 7 7 I OTHER REVENUES 117 +19% (+15% CURR. ADJ.) 19
Slide 26: Key figures
Amounts in NOK million Number of clubs, EOP 273 275 Outgoing member base ('000s) 728 731 Average number of members per club 2 668 2 658 ARPM (NOK) 550 510 Yield (NOK) 474 431 Reported EBITDA (MNOK) 471 445 EBITDA before impact of IFRS 16 (MNOK) 170 155 EBITDA before impact of IFRS 16 margin 14% 14%
Slide 27: IFRS 16 impact reconciliation
Property, plant and equipment 682 0 682 Right-of use assets 4 679 4 679 0 Deferred tax assets 181 73 108 Prepaid expenses and accrued income 171 -101 272 Total assets 9 077 4 651 4 426 E qui ty 1 262 -377 1 639 Non-current lease liability 4 110 4 110 0 Current lease liability 957 957 0 Other current
Slide 28: Definitions of alternative performance measures
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 29: Cash flow definitions
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 30: Why invest in SATS?
WHY INVEST IN SATS?
Slide 31: Why invest in SATS
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 32: Prioritizing a wide product offering and market-leading clubs
We prioritize having the most The offering make it easier for our compelling and wide product members to succeed with their offering, market-leading clubs, training and maintain a sustainable best employees and top-notch activity level, evidenced by locations increased activity By attracting new and
Slide 33: Club offering for members
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 34: Scale advantages in product and group training
• 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 35: 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 36: 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 37: 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 38: 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 39: Proven operating model
Automated scheduling tool Standardized process for optimizing total labor hours measuring member and role composition based satisfaction and prioritizing on workout forecasts and improvement efforts member satisfaction accordingly Streamlined routine-lists and Annual audit across portfolio manuals a
Slide 40: Capital allocation: capex, leverage, growth, buyback and dividends
Maintenance CAPEX of 5% Leverage1 ratio ranging from Investing in high-returning Initiate share buy-back Semi-annual dividends, first of revenues 1.5-2.0x growth opportunities program payment expected in H2 2025 based on H1 2025 financials Continuous investments in Conservative approach to Expected
Slide 41: SATS
SATS