SATS (SATS) Q2 2024 (Q&A) earnings summary

Executive summary

• Achieved record financial results for the sixth consecutive quarter, with strong operational and commercial performance in Q2 2024 and consistent revenue, EBITDA, and EBIT growth since October 2022.

• Q2 2024 revenue grew 5% year-over-year, driven by higher average revenue per member and stable member base, with total workouts up 8% to 11 million and member base reaching 719,000.

• EBITDA and EBIT both increased by 13% compared to Q2 2023, reflecting improved operational efficiency and cost control.

• Free cash flow surged 480% to NOK 132 million, and leverage ratio reduced to 1.7x from 4.7x last year.

• Announced intention to distribute at least 50% of net profit via share buybacks and semi-annual dividends, with first dividend after H1 2025.

Financial highlights

• Q2 2024 revenues rose 5% year-over-year to NOK 1,266 million, with ARPM up 5% to NOK 580.

• EBITDA before IFRS 16 up 13% to NOK 219 million; EBIT up 13% to NOK 159 million; net profit up 9% to NOK 103 million.

• EBIT increased 260% year-over-year to NOK 438 million for the last twelve months.

• Net debt reduced to NOK 1,179 million from NOK 1,676 million year-over-year; leverage ratio at 1.7x.

• Operating cash flow reached NOK 154 million, with cash conversion at 70%.

Outlook and guidance

• Focus on strengthening member product offering, operational efficiency, and club portfolio optimization to drive both volume and ARPM growth.

• Expect to maintain leverage at the lower end of the 1.5–2.0x net debt/EBITDA range by year-end.

• Guidance to open 8–12 new clubs annually, with continued investments in club upgrades and new product launches.

• Revenue growth to be driven more by yield (ARPM) than volume, with similar seasonality expected in H2 as in H1.

• Plans to return excess capital to shareholders through buybacks and dividends, distributing at least 50% of annual net profit.