Basic-Fit N V Ord

Hello and welcome to BasicFIT Q3 2025 Trading Update call and live audio webcast. Please note that today's conference is being recorded and for the duration of the call, your lines will be unlisted only. However, you will have the opportunity to ask questions at the end of the call. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now turn the call over to your host for today's conference, Richard Teeker, Head of Investor Relations. Sir, you may begin.

Well, thank you and good afternoon and welcome everyone to our Q3 2025 conference call and webcast. And with me today are CEO René Moos and our CFO Maurice de Glier. This call is as usual being broadcast live on our website and a recording of this call will be available shortly afterwards. As usual, I would also like to point out that our safe harbor applies. We will start with René, who will discuss the highlights and the operational developments during the first nine months, and we will then move to René, who will reiterate our outlook. After these prepared remarks, we will open the call for questions, and with that, René, I hand it over to you.

Thank you, Richard, and welcome everyone to today's call. In the first nine months of 2025, Basic Fit continued to see strong member ingrowth across all countries, putting us in a good position for the fourth quarter and the full year. We announced in March that we took the decision to slow down club openings over the course of 2025 and 2026 to focus on improving our balance sheet, lowering our net leverage ratio to below two times 2026. as well as starting a 40 million euro share buyback program. All of this with the intention of delivering value to our shareholders. With this in mind, in the first nine months of 2025, we increased our club count by 78, bringing our total club number to 1,653. Most of our new club openings were in our growth markets, France and Spain, and followed by the Benelux in Germany. Year-to-date, we've opened 82 clubs and remain on track to reach our target of around 100 club openings in 2025. At the end of Q3, we had 4.73 million BasicFit members across all of our countries. The positive membership development seen in the first half of the year continued in the third quarter, with a growth of 218,000 memberships. This is 95% higher than the same period last year. This increase is all the more impressive when we take into account that Basic Fit opened 54% fewer clubs over the first nine months compared to the same period last year. This considerably stronger performance was driven by solid membership development in all countries. with visible ingrowth in both our mature and immature clubs. At the end of the third quarter, our 1,217 mature clubs had an average of 3,176 members. This is up from 3,074 members at the end of the second quarter. Looking at some country-specific details now in the Benelux, our countries continue to perform well. Spanish clubs continue to be on track supported by national marketing campaigns. In France, with the management change we did and the higher levels of maintenance seen this year and last year, we have delivered the anticipated structural improvement resulting in higher member satisfaction and an improved membership development. Furthermore, we expect a 35 million euro in additional cost for staffed 24-7 clubs to be fully mitigated on a run rate basis by year end. In Germany, increased brand awareness is supporting our incremental and targeted rollout strategy, which saw improved membership ingrowth, giving us confidence that we are on the right path there. Total revenue for the first nine months was 1,034,000,000, a 60% increase over the same period last year. Stronger revenue was boosted by the new membership structure we introduced at the beginning of this year. This moved our average revenue per member to 2460. The average revenue per member was lower than that was announced in the second quarter of 2025. I'd briefly like to explain why. The first one is mathematical. Due to the strong number of joiners in Q3, especially in the month of September, combined with the limited amount of time that these members had to contribute to the revenue, it slightly lowered the average for the first nine months. Additionally, the strong growth of France and Spain, where VAT rates are higher, has also had a modest impact. The underlying trend in average revenue per member remains very positive, and we expect it to continue increasing in the next couple of years. Let's now look at how we are upgrading the member experience. As the largest fitness chain in Europe, we continue to evolve to meet the ever-changing needs of our members. Our aim has always been to give our members the best possible value for money experience and to make fitness accessible for everyone. How are we doing that? Moving to a 24-7 model gives our members the freedom, convenience to work out how they want and when they want. In the first nine months of 2025, we continue to expand our 24-7 model into Germany and Spain. When 24-7 is not possible, for example in a residential building or for zoning reasons, we extended the opening hours. In selected clubs in the Benelux, we introduced strength circuit training and relax and recovery zones. capturing the fitness and wellness trends seen across the fitness landscape with the aim of further increasing the uptake of the ultimate membership. These services, in addition to improvements in club operation and maintenance, are also having an impact on member sentiment. For the first nine months, we had an average Google review score of 4.3 across our countries. This upward trend proves that we're giving our members what they want. And with that, I will hand it over to Maurice for the final slides.

Yes, thanks, René. At our full year results, we updated our strategy and gave an outlook replacing the guidance set at our Capital Markets Day in 2023. I'd like to confirm that guidance now. In the first nine months of 2025, we opened net 78 clubs and 82 clubs years to date. With the operational improvements made or in progress, we remain on track to meet revenue guidance of between 1.375 to 1.425 billion euro. And we are also on track to meet the underlying EBITDA less rent guidance of 330 to 370 million euro. Furthermore, we expect to be cash flow positive in 2025. As for franchising, we see great opportunities in launching our own franchise platform where we can leverage our skill advantages, technologies and knowledge. The franchise business will require limited capex and opens the possibility to expand into new countries. In the past quarters, we continue to pursue different franchise options and we continue to expect to update the market on our franchising plans before year-end 2025. Looking at longer-term targets outside of the scope of 2025, we are committed to reducing our leverage by two times adjusted EBITDA in 2026. With a strong development year-to-date and adjusted capital allocation in our updated strategy, we feel comfortable about reaching this target. Over the past two years, we also have been reducing the overhead costs, including marketing as a percentage of revenue. We are on track to achieve the targeted 11.5 to 12% of revenue in 2025. So in conclusion, as we pursue our updated strategy, we remain as ever committed to delivering value to our members, our investors, our employees, and to all our stakeholders. And with this, I end our presentation and open it up to questions from analysts and investors.

Thank you, sir. Your lines are now open. If you would like to ask a question at this time, please press the star key followed by the number 1 on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. Again, please press star 1 to ask a question. We'll pause for just a moment to allow everyone to signal. We will now take our first question from Chris Kippers of the group Peter Kemp. Please go ahead, your line is open.

Yes, good afternoon. Thank you for taking my questions. First question related to France. You've mentioned that the new management team combined with higher CAPEX resulted in, you quoted, higher membership satisfaction and improved membership development. Does this imply that this membership development is somewhat weaker than other regions? Could you provide more details on that? And then I've got a second question regarding your average rates or your ARPU rates. Of course, we know the influx indeed in September is quite strong, but to what extent could you provide us with more details, whether it's linked to indeed those high new members which don't contribute for the full period, or could it also be linked to which formats you are selling? Could you provide more details on that? Thank you.

Yeah, to start with France. Let me answer the France answer, if you take the ARPU question. The France management and the change, I would say, I'm doing this now top of my head, but I would say that France is actually doing better than the other regions. We had a big ingrowth in the third quarter in the French region, and that is also why we communicated that the 35 million is already this year being, say, cash flow break-even. So the French management change and the investments we did are working out very well.

Yeah, and the second question, I'll go into that, the average yield per member decrease. Actually, it is as you said. So the sequential yield decreases due to the strong numbers of journals in Q3 and particularly in September. And if you do the math, then the high influx of new members combined with their limited time contributing to revenue, that has slightly lowered the average of the first nine months. And then, additionally, the strong growth in France and Spain, there is the VAT rates are higher. That has also a modest negative impact. But on the underlying trend in average revenue per member, that remains very positive, and we expect it to continue increasing in the next couple of years.

Okay, thank you. Clear.

Thank you, and we'll now take our next question from Robert Bos of ABN AMRO. Please go ahead.

Yes, good afternoon. Thank you for taking my question. I have a follow-up also on the youth. Did you see any changes in the split between the different membership types at all? Because you provided two reasons for the slightly lower youth versus age one, but of course the mix membership types can also have an impact did you see anything worth mentioning there that's my first question and my second question at h1 yeah you mentioned several factors that should enable a basic fit reaching positive free cash flow after having reported quite negative free cash flow of almost 60 million in h1 my question is did you see these factor factors materialize already in Q3, the way you had anticipated, or maybe even more positive, maybe a comment there would be very helpful. Thank you.

I will take the first question again, if you take a second. So the ultimate percentage is stable. So we have three different membership, as you know. So the most expensive membership, the ultimate, is currently just above 40%. That is of the joiners, so that is not of the total base. That is less than half. But the ingrowth, so all new joiners, a little bit above 40% is taking the ultimate membership. So overall, that hasn't changed. Actually, we're very happy with that number, and we're trying to get that ultimate percentage even higher. So that's why we're testing different things that parts of the membership will only be available in ultimate membership. But eventually in time, and that's why we also say, because we never change prices for existing members, so only the new joiners are paying these new prices. So it takes time for the whole group of members, the whole 4.7 million members to go on this new system. So it will take another one to two years at least to have the full base of members having 40% on the ultimate.

And then Robert on your question about free cash flow in 2025. What we see is an improving profitability in the second half of the year, driven by, of course, increasing in membership and yields. And that's also leading to an improvement of underlying EBITDA less rents. Of course, we have a still continuing focus on limiting our costs. And then additionally, we have the timing of our investments and some lower expansion and maintenance CAPEX to be expected in the second half of the year. And that combines these factors that will enable us to achieve a positive cash flow in 2025.

Okay, that's clear. Thank you.

Thank you, and we'll now take our next question from Vico Silvassi of ING. Please go ahead.

Yes, good afternoon, and thank you for taking my question. My first question would be on the French 24-7 gyms and the costs related. Do you have any visibility or can you share anything new about the potential resolution on the staffing costs on these 24-7 gyms in France?

Well, to start, what we said before that we saw in the first half that we have between 20, 30 or 30, 40 more joiners a month on those clubs. And we have continued to see that in the third quarter. So those costs will actually be gone by the end of the year. But if you are mentioning how it is going, if the French government have signed the contracts already so we can actually do it, The thing is we continue to work with our advisors and also the industry bodies and the French public authorities. We remain very positive that in time we'll be able to have the staff clubs in France like we have in all other countries already. We will continue to what we're doing right now. We will stay flexible. Once that is actually in, then we can switch it quickly. We are... So the good thing is we reached extra members this month that we need to pay for the extra cost. So that is a good thing. And we still think that we will get the signature to be able to do Starflows in France.

All right, thank you for this. Just to kind of double click on this, if I understood correctly, you're also able to lower these costs for running these 24-7 gyms if it turns out so that you cannot do staffless. So is there kind of a point in time when you take matters into your own hands and kind of cut the costs proactively?

Yeah, so in a way that would be positive because then we have less costs, like between 50 or 20 million less costs, but that would also, you could look at it in a negative way because that means we think we will not get the authorities to approve this, and we are really positive that the authorities will approve this. So for the coming, at least, first half of next year, we will definitely not change anything.

All right, perfect. Thank you very much. And then a second question would be on kind of capital allocation priorities in 2026. Of course, the first one is to get the leverage below two times, but let's say there would be a resolution in France and you see that the free cash flow is coming in strong and you start seeing that, okay, the leverage will go sub two times. Will you then rather look at share buybacks or increasing the expansion capex in 2026? Can you share anything on this?

Yeah, well, that is something that we want to communicate on our investor day at the beginning of next year.

Understood. Thank you very much.

Thank you.

Thank you. And we'll now take our next question from Jeremy Kinsade of Kampen.

Please go ahead. Good afternoon, everyone. I just have a very straightforward question. Obviously, you're membership numbers this quarter were very strong and you say that the growth has been strong across all regions but particularly strong within your mature clubs. I'm just wondering why do you think that is? Do you think it's something to do with the actions you've taken within the business over the last wee while or do you think it's due to external forces?

Yes, I guess it's a combination of the two. I think the external, what is happening around us is not that it's all completely normal and normalized, but it is stable, let's call it that way. We have taken some actions to really focus on member satisfaction and that's also what we communicated already. I think that is very helpful because that shows that our members are happy. So what we also saw is that the length of stay is again improving slightly, but the yield number is around 4% a month now. So the length of stay is between 24 and 25 months. Remember when we got listed, it was like 15 and 16 months. So every year it's getting a little bit higher. So length of stay is, of course, a big driver for memberships. So that is very good. Yeah, I think overall we're finally back to normal. So it's been now a few years we have corona behind us. And I would say that we also, so we, in that period we lost half of our members, but we also lost a lot of our older members. We lost a lot of our female members. They're all coming slowly, but they're coming back. So we see the percentage of female members also increasing again. So, yeah, I would say we're back to normal again now, and that is helpful.

Sure. And then reading between the lines, obviously you said the mature club, members per mature club growth is very strong. And doing some back-of-the-envelope calculations, it suggests that the immature club growth is not quite as strong. Do you have any views or thoughts around that? how that could progress going forward, or if there are any other actions you can take to improve the immature clubs?

No, I think actually, well, I didn't do the cigar calculation yet, but I think if you look at immature clubs, I think it's even better. So it's around or above 2,000. which is higher than it was last year or the year before. So I think it's better. And what we said during the CMD end of 2023 is that we expect it would take between two and three years to reach this 3,250 members again of mature clubs. Yeah, we're close to that now. So that's going the right direction. We still have the coming months. So month of October, January, February are definitely growing months. So I think overall we will eventually reach that number again. So that is very good. If you look at the new club openings, that is I think also good to mention is that the new openings every year is going a little bit better. So let's say four years ago, let's call it, we had 500 joiners in pre-sales and every year we see like 100 more. So we're doing it last year better than 23, and this year we're doing it better than 24. So we're getting better at it in opening new clubs. So I think overall it's a combination of mature and immature clubs, but we're going the right direction.

Great. Thank you.

All right, then if there are no further questions, oh, I see there is somebody else coming online. Operator, could you please give KBC the question, please? I see that apparently the operator has left the call, which is unfortunate. If you would like to hold on for a minute, please. Let's see if we can solve this in the coming minutes. I'm sorry that I have to say that there are some technical issues at the call provider. So what I suggest is that anyone who has still some questions that they contact either Heather or me, and we can then answer any remaining questions that are left. For now, thank you very much for joining us today, and we'll be in touch. Thank you. Bye-bye.