SATS’ first quarter dominated by COVID-19 and rapid digital product development
SATS ASA (“SATS” or the “Company”) leaves behind a challenging quarter, weighted by the outbreak of COVID-19 and the following closure of clubs, but also dominated by a high pace of innovation and numerous product launches, contributing to making people healthier and happier.
Key highlights from the first quarter of 2020:
- Reduction in member base of 1% versus last year due to a negative sales effect from COVID-19
- Total revenues of NOK 990 million, compared to NOK 1 010 million last year (-2%). Estimated COVID-19 related revenue loss of NOK 110 million
- Adjusted EBITDA of NOK 40 million, down -67% from NOK 120 million last year, including an estimated negative EBITDA effect of NOK 85 million from COVID-19
- Four new club openings, of which two acquisitions and two greenfields, filling out the clusters in Stockholm and Helsinki
- Temporarily closed all clubs on 12 March, with reopening in Sweden on 26 March and in Finland on 24 April
- Retaining parts of the membership revenue, as members were given option to continue the membership and use SATS’ extended digital offering at a reduced price during closure period
- Swift action to manage the cash position and lower the cost base, reducing operating costs by ~20% during the closed period in March
- Temporarily laid off more than 5 000 employees in Norway and Denmark
- Support from governmental compensation packages
- Expansion and maintenance capex partly put on hold
- Strong liquidity position due to partly continued member revenues, RCF drawdown and reduced cash burn
SATS has reopened clubs in Sweden and Finland and will use the experience from these reopenings when the clubs in Norway reopen on 15 June. The Company is continuing to work close with local industry organizations and health authorities in Denmark to establish an industry standard for how to reopen in a responsible matter, but is still awaiting an opening date from the Danish government.
“Public health is more important than ever, but the activity in the population is declining. According to an Opinion survey in collaboration with Virke, 21% of the Norwegian population have seen a decline in fitness during the pandemic. In Denmark, an analysis from “Idrættens Analyseinstitut” shows that the share of the Danes working out regularly has dropped from 55% before the closure to 39% during the closure. SATS is ready to open in a safe and responsible manner, continuing to make the Nordic population healthier and happier”, says Sondre Gravir, CEO of SATS.
Investments in the digital offering the Company made the past years is now really proving its worth. Building on the existing platform, SATS has further increased the pace of innovation drastically to meet the members’ need to be able to work out from home during the outbreak of COVID-19. The Company has rapidly launched a range of new digital products, including live sessions, online physiotherapy, online personal training, and online nutrition counseling, which are well received by both members and employees.
“With the digital offering SATS has given more than 350 000 digital participants great training experiences in March and April even with closed physical clubs,” Gravir continues.
SATS expects the negative effects caused by the COVID-19 outbreak to prevail some time after reopening of all clubs but is confident that the long-term outlook is still dominated by society’s increased focus on health and well-being and robust global trends, such as political initiatives for health and digitalization. Over the longer-term, the economic impact of the pandemic is expected to drive further consolidation in the fitness industry. SATS believes the market dynamics post COVID-19 will be suited to the company’s business model. SATS has plans for further expansion in the Nordics and continued investment in the product offering to remain the leading provider of fitness and training services in the Nordics.
Please find enclosed the Q1 2020 presentation and report in the original stock exchange announcement.
Cecilie Elde, Chief Financial Officer, phone: +47 924 14 195
Stine Klund, Finance and Investor Relations Manager, phone: +47 986 99 259
Malin Selander, Head of Communication & PR, phone: +46 70 426 40 06
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.