Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 17% to EUR 584 million compared to the previous year.
- Expanded club network to 1,537 clubs and membership base to 4.1 million.
- Underlying EBITDA less rent grew by 26% to EUR 139 million.
- Strong membership growth in all countries, particularly in Benelux and Spain.
- Successful integration and conversion of RSG Spain clubs, with positive membership trends post-conversion.
Negative Points
- Bad debt write-offs increased compared to the first half of 2023.
- Higher net debt of EUR 944 million at the end of June 2024, up from EUR 804 million at year-end 2023.
- Operating costs related to rents and personnel increased by 20%.
- Market conditions in France remained challenging, despite some improvement in Q2.
- Cash finance costs increased significantly to EUR 22.8 million from EUR 13.5 million in the first half of 2023.
Q & A Highlights
Q: Your EBITDA per mature club was up 16% to EUR189,000. Is the aspiration to reach EUR460,000 in two to three years still valid? What gives you that confidence?
A: We remain confident in reaching EUR460,000 per mature club in the mid-term. The current average EBITDA is slightly diluted by the addition of 2021 clubs, but we see improvements in those vintages. The gradual increase in yield and membership growth supports our confidence. The second half of the year typically shows better performance due to increased memberships and yield.
Q: Can you explain the discrepancy between cash rental expense costs and the rental expense of open clubs on your income statement?
A: The difference arises because the cash flow statement includes only the rent actually paid, which can have timing issues. The P&L statement includes invoiced rent, leading to small differences between the two figures.
Q: Planet Fitness opened its first club in Spain earlier than expected. What are your thoughts on this and the competitive environment in Spain?
A: Spain still has significant room for growth in fitness penetration. The entry of new players like Planet Fitness can help grow the market. While their entry might seem early, Spain is a large and immature market, and more chains can increase overall fitness penetration.
Q: Can you remind us of the changes in your working capital policy and its impact on net debt?
A: Post-COVID, we returned to paying suppliers on time to maintain good partnerships. The higher number of club openings in the first half of the year also impacted working capital. We expect a lower net debt level at year-end 2024 due to fewer club openings in the second half.
Q: How are the operational changes in France affecting growth trends?
A: We observed improvements in France during the second quarter, with better performance in both new and mature clubs. Separating responsibilities for club expansion and operations has proven effective, and we are seeing positive trends.
Q: What is the status of the potential VAT increase in the Netherlands, and how would you respond if it happens?
A: The sector is actively lobbying against the VAT increase, which is proposed for January 2026. If it happens, we would not change pricing solely due to VAT but are working with a pricing agency to optimize our top line. We may see some changes in September and more significant adjustments in January next year.
Q: Can you provide an update on your franchise plans?
A: We are optimistic about franchising and see many opportunities. We will communicate our plans in the last quarter of this year.
Q: How confident are you in reaching the medium-term guidance of 3,250 mature members per club?
A: We are very comfortable with reaching 3,250 mature members per club in the mid-term. However, we are not sharing specific numbers per country.
Q: Can you comment on the competitive landscape and any changes in membership fees or promotions?
A: The competitive landscape remains largely unchanged, with Basic-Fit growing faster than competitors. Aggressive promotions like EUR1 for six months in Germany are no longer offered. We have seen price increases among most competitors.
Q: What are your expectations for net debt at the end of 2024?
A: We expect net debt to be lower than the current level of EUR944 million by year-end 2024, considering the repayment of the Schuldschein loan in October.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
