SkiStar AB (publ)

And warm welcome to the Ski Star Q1 23-24 presentation. My name is Stefan Sjöstrand and I will guide you through this presentation today together with my colleague.

Hello, my name is Martin Almgren. I'm CFO here at Ski Star.

So since we had some technical issues last time, we will get help from financial hearings. So can we please take next slide, please? So the agenda of today will be a short introduction and also a recap from the capital market day we had in October for all of you who wasn't there just as a fresh up and reminder. Then we will go through the Q1 and then we will finalize with an outlook and a summary of today's presentation. So next slide please. And next slide please. And we will talk about our position Our position will continue and we will continue as the leading holiday organizer for Scandinavia and our vision is to create memorable mountain experience all year round and last year we ended up the year with a 4.3 billion revenue and We also were very satisfied with 8 out of 10 guest satisfaction 8 out of 10 employee satisfaction and also that our digital journey continue with a lot of ski paths purchased digitally as well as check-in made digitally. Next slide, please. We are really glad about our foundation where we put people and culture in the center together that we would our guests to have a safe and secure experience at our destination. And of course, all this will be happening within the field of sustainability, where we put a lot of efforts, which we will also come back to later on in this presentation. Next slide, please. During the Capital Market Day, we presented that our main area of the strategic framework is around mountain operations, and it is around property development. And we're really glad that we are strengthening our a situation within mountain operations. And even though that it's hard time within property development, we can see that we also have a new and clear strategy about how to take care of all our land and the land bank we are having in our books. Next slide, please. SkiStar is one of the largest players worldwide. We are the fourth player after two Americans, one French company, and really glad to see our position as number four worldwide. Next slide, please. And also this leading up to a market leader position in Scandinavia where we have 42% market share and we are stable and we're also developing all our destinations. Next slide, please. And if you then look into the position in Scandinavia, we can see that we have an unmatchable position within Scandinavia. We have a lot of length of groomed slopes, and I think that is the area where we should look into, because that is also giving the number of skier days. And as you can see, we have the five largest destinations within Scandinavia among skier days. Next slide, please. And we really put effort in to continue to be the leading holiday organizer for Scandinavia. And what we would like to show with this slide is actually not only the number of skier and activity days. It's also the number of beds we are providing to our guests. And the importance of those beds is that they are what we are calling warm beds. And they are utilized from our customers. And that also helps us to continue to sell ski paths. And not only ski pass, also ski school and also rental, etc. Next slide, please. And this picture is showing what we are doing with our land and how we are developing our land. And if you look into the four pictures, you can see that to just guide you through is that the first picture up to the left is where we are now developing a new ski area. So the red circle in the left side of the corner of the picture up to the left is where we are now developing a new ski area. And if you look down to the picture to the left is how it looks like this summer when the lift and the area started to be And then in the picture right up in the corner is how the lift looks like now, and it will open up on Thursday this week. And then you can see some forest on the left side there, and that is where now we will develop housing just next to the slope, and customers will have ski-in and ski-out locations. And within a couple of years from now, it will look like the picture down to the right. And this is how we are developing areas from area where we have not any development. We are putting up a new lift where we put heating and bulbs on the lift, which creates attractiveness. And then we build housing around these slopes, which mean perfect conditions. Next slide, please. For us it's very important to continue our growth journey and we have had a lot of Swedes and also Danes and British guests visiting us the last couple of years. And we can now see that we have tried to drive an internationalization also of the company and that is really paying off this year. We are increasing the number of Danish guests and of course Danish and British guests are more say profitable than the Scandinavian or the Swedish or Norwegian guest as an example. So in an average we can say that the average spend at the Ski Star destination is 17 000 krona compared to a Danish guest who is actually spending 26 000 krona which is of course extremely good for our P&L. And the reason behind that is that a Swedish customer put 2.2 products into the basket versus a Danish customer putting 2.9 products into the basket. Next slide, please. This year at the Capital Market Day, we also presented new financial targets, which meaning organic growth of 6%, an operating margin of 18%, and also a leverage of net debt EBITDA less than 2.5. And we will also provide a 40 to 60 percent dividend to our shareholders. Next slide, please. So if we then look into the Q1 summary, it's actually looking pretty interesting. Next slide, please. Because the winter is here, and the winter has come extremely early at all our ski destinations. And at personal reflection, I went up to Vemdalen at the October break to spend some time with my wife, walking, hiking. But all of a sudden, we had to swift our plans because the snow started to fall in a very high scale. And actually, we managed to open up Vemdalen in early October. And that is something which has been very important for us this winter season so we can see that there is a strong demand for winter holidays in scandinavia we are increasing during the report we presented in q4 we had plus seven percent but now we have increased to plus nine percent uh uh booking uh for the winter holidays we also have extremely good snow conditions, like I said in the beginning. We have actually finalized the snow production. We finalized it on Friday this week. And that means that we stopped producing snow four to six weeks earlier than normal at all destinations. And that is due to a very efficient snow production. And the snow production has been efficient since it has been very cold. And it's been cold for a long period over time. And that means that we actually have got excellent conditions to produce snow, meaning that we haven't needed to produce it on the margin temperatures. That means that we have been able to produce during excellent conditions. So really happy for that. And this also helps us to give us a long season. I'm also really glad that digitalization grows fast. It grows faster than... we have seen over time and we have now 1.8 million members within MySkiStar and that means that we actually owning the customer data and you can see many companies working with consumers today that they are not owning the customer data and we own the customer data as a first party data and that will be even more important going forward so that means that we can be in direct contact with our guests and consumers. We can also see that we increased online visits with 9%. Last but not least we are really glad to see that we have a retail growth of plus 54% during this quarter and of course the early start of the season has helped us to grow within retail So not only selling ski paths, also selling more products than ski paths. Next slide, please. I think these slides just shows our growth within each destination and also how we have wanted to develop our destinations over time. That's why I'm really glad that we have finalized the acquisition of the ski school in Trysil. That means that we previously had a small stake in that company and we actually now have made an acquisition of the whole ski school. Trysil guides are now in our hands and that means that we can operate ski school in all destinations. We have also opened up a new concept store in . And of course, we're also developing cross-country skis at all destinations. And this helps us now to be a full service provider at all destinations. Next slide, please. I think we get questions about this with the booking pattern, and is the booking important or not? And of course, it's Actually, I'm really proud of showing this slide. It shows the second best booking ever. And that means that there is a strong demand in the market for going to SkiStars destinations. And the only peak which is higher than what we have right now was when we had the pandemic and it was not allowed to travel outside the border of Scandinavia. And of course, to show this graph to you is something I'm really proud of. And also, if we take next slide, please, we can see that the booking pattern is higher on every period compared to last year. And that is also then ending up to this 9%. Previous year, we had some challenges in the spring Easter season. And here you can see we have a really good pickup of plus 20% in the end of the season already now. That shows that the customers are really interested to book in advance. So you can see that on Thursday this week we are welcoming a lot of guests to our destinations. And they are at a 9% higher level during the upcoming three weeks compared to last year. Then we will have a very strong mid-season between week two and six, where we increase 8%. And then we have the winter break, which is normally always highly booked. And also there, we are 4% up. And then again, the spring-easter season is up 20%. So really proud to show this slide. Next slide, please. This slide is showing our digital engagement in quarter one. And like I said, we have 9% up in visitation. And the visitation is coming from both the skista.com, where we have a little bit of decrease, but we are increasing dramatically in our app. And that is also what we can see, the consumer behavior is steering more and more into the app. We can also see that we have a very high increase of visits on our skistarshop.com and also our newly created equipstore.com where we also see high interest from our customers. Like I said 1.8 million members in SkiStar member. It's going from 1.6 to 1.8, which is a very strong number in general, and then to have an increase on that. Next slide, please. This is my last slide before I hand over to Martin. This is just to show you all that we have a very strong revenue within our retail business. We have actually doubled the business in five years. now we have a turnover reaching out to 350 million and we have a good split both within the physical stores and online so the good growth and the stable growth on both and we are growing growth on growth here so Martin I say next slide please and hand over to you.

Thank you Stefan and we start with the A bit development over the last six years and as you can see to the right on the picture here, it's a slow quarter and we are in the transition between facing out the summer and starting up the winter season. So normally this is a low season. Not so many things happens between the quarter. And so next slide please. Moving on and describing the categories and revenue per category, we started up and we had the sales this quarter of 220 million, which is an increase of 43 million, corresponding to 24%. And the sales growth comes, as Stefan said, mainly from two categories, its ski paths and its retail shops. And both are within the segment mountain operations. And this year, we opened up the destinations already in the beginning of November, and that has had a positive effect, as you can see, both on ski pass sales and on retail. So moving into the ski season, and the effect you see here on ski pass is what we call the short-term ski pass. It's a one-day up to a week ski pass sales that has increased with 10 million. The sales of the winter season ski paths are not included in the net sales for this quarter and that's the same way it has been over the years. We always start to include our winter season ski paths from 1st of December because that's when we normally open up our destinations. Even though The increased sales of the ski pass, the winter season ski pass, has a positive effect on our operating cash flow that you will see also later. So the early start has not only increased the sales, but also a positive effect on cash flow. Moving on to the retail business, increased with 33 million, corresponding to 54%. And the growth comes mainly from the web shop, which grew with 59%, but also the physical stores grew with 32%. And that's due to more people visiting our destinations now in November. And finally, I want to comment on the lower sales on hotel and lodge, where we have a lower sales of 2 million, which is mainly driven by a slow start in September and October. And there we had the lower volume of group and conference guests. And we have also been renovating some restaurants in Sälen. So they have been closed during this quarter. So the sales from our restaurants is also lower. But the renovations are now ready, and we will open up the restaurants to the Christmas guests that are arriving later this week. Next slide, please. Looking into the operating profit, which decreased with 13 million to minus 464 million. Looking into our segments, the loss in the quarter comes from the operation of ski resorts, who made a loss of 19 million. And the segment has, during the quarter, had extra costs related to the early start of the season. with about 20 million kronor, mainly from higher energy related to the early snow production, but also increased costs for the groomers to prepare the slopes. And part of these costs are now taken in this quarter and in the comparison year, it was in the second quarter, mainly in December. So there is a movement of these costs between the two quarters. In the segment we also have increased costs related to the products that we have sold in the sports shop and retail business. So that you should be aware of when you look at the segment. Moving on to the property development, as Stefan said, there are no capital gains in this quarter, so it's a low quarter for the property development segment. The hotel segment, as I said, had a negative sales development, but have been able to adjust and work really efficiently with their costs during this quarter, and they have managed to decrease their loss with $7 million. So moving on to next slide, please. So I have talked about all the bullets here, and I just want to summarize and say that even though we are a little bit lower on the operating profit, looking at the cash flow from the operating activities has been really positive. And the main part of this, or the main reason, is the early start. the effect from increased sales in the webshop and earlier sales of our winter season ski passes. Next slide please. A few words about sustainability. So looking at the first goal activity and recreation this quarter when we summarize it we can see that we have had a record quarter with more than 82,000 ski and activity days, which is a growth of 109%. Looking into the ecosystem, what we have done during this quarter, we have launched a new initiative called Together for White Winters, where we want to engage guests and collaborators and public and companies and really get and drive momentum for climate change. And then into the dialogue and interaction segment, here we have had the opportunity to attract and employ 2,400 new employees for the winter season to more than 80 positions in both Sweden and Norway. So that was it. Next slide, please. together for white winters that I talked a little bit about. So there is a web page and you can follow the initiatives that we want to do related to this project. Next slide please.

Thank you Martin for that and I would like to talk a little bit about the outlook, what's happening actually in the company, what are we working on at the moment and just to give you a little bit of a teaser. So next slide, please. So what is this 360 SkiStar? And we will actually launch this week a new SkiStar app where we would like to guide and simplify the guest experience during vacation at our destinations. And this is something new which we have developed. We will have this as a test phase now for a couple of weeks and then later on we will of course develop our original Schisto app into the maps of the future. For you who are interested, please download the app from Apple Store and you can see a little bit more about these maps. You can see clearly how the lifts are operating and also if you're a family you can put in all your family names and you can clearly see where you have all your members within the family or friends within the within the slopes or where they are and maybe what i think is more interesting for the future is this is actually a community where you can share your experience and give tips photos post you can rate you can also give travel companions like I said but last but not least is that this will actually become our new marketplace going forward here we can see an opportunity to create new revenue streams where we will provide for example Things we are not operating at ski stars destinations. For example, scooter safari or if you would like to go out for a hiking experience, etc. You can book that in this app and then we as a company will take a kickback for all the services we provide and also let the companies know have a place on our web pages or our app. So this is super interesting for the future and we are now launching it this week for a test and then we will evaluate that and then we will continue to develop this new interesting product going forward. Next slide please. And I will finalize this outlook and how it looks for this season and I must say really glad with this historical winter conditions at all destinations because that will secure a long season. That meaning that the winter we have that we have been able to provide snow and exactly like Martin said the cost we have taken now in the first quarter they are of course supporting us for the whole year and also mainly in the second quarter. The booking situation we have, like I said, it's for all weeks compared to previous year. And that will also show you the interest we have to come to our destinations. Lastly, but not least, I was in Hemsedal Thursday, Friday last week where we opened up the new lift. I will travel to Sälen tomorrow to open up the new lift in Sälen. And we have done a lot of investments and focus in our core business. We have invested in lifts and the chairlifts in Hemsedalen and Sälen is two examples. We are investing in lifts in Åre as well as a complement to the seatings we have to just get a better experience for our guests. We have invested in snow systems. That also helped us this year when the cold winter came early. Instead of having a lot of people running around in the slopes putting on the snow guns, actually this started up automatically. Here you can see the future that we have invested in automatic snow guns and snow production. That will help us for the future. We have invested in new slopes. We had made acquisition, like I mentioned, in ski school and also in some sport shops. And of course, this will help us in the long run. So I end this conversation by saying next slide and open up for Q&A to the audience.

If you wish to ask a question, please dial star 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Frederick Littell from Handelsbanken. Please go ahead.

Yes, thank you for taking my question. Thank you for the presentation. I had two questions, if I may. You talk about your snow production that you have completed. Can you describe that a little bit more? I mean, you have so much natural snow. Does that mean that you produce less artificial snow for less slopes, or do you have a set schedule each and every year for what slopes to produce snow in. It would be interesting to hear a little bit more how you work with that. And then the second question is, you now have employed 2,400 people for various positions for this season, up from 2,200. So is the reason for the increase in employees because you have bought some hotels and all that stuff, or why is that up? Just if you could put some color on that. Thank you.

Thank you, Fredrik. I take the questions. Martin looked at me and pointed to me, so I will take them. So if you look into snow production, I think it is super interesting when you start to get to know more about snow production. I'm really glad for your curiosity around this, because in just general, if you produce snow on the margin temperatures like minus two degrees, you need one cubic meter water and you get one cubic meter snow. If you go up to minus eight, you get one cubic meter water and two snow. If you go up to minus 12, 13, one cubic meter water means three cubic meters snow and also more dry snow. That is extremely efficient. During this period, we have had very efficient snow production, meaning that we are much more can say happy with that snow production we have had now this year and also that the investment we have done in automatic snow production meaning that snow guns produce snow the whole 24-7 and that means also that we don't need this start and stop you to say which you need to have when you go down to margin temperatures so that has been a very efficient production very efficient also how you put out this snow in the slopes and also in just so in general a very efficient setup of the slopes then we have invested in more snow guns in for example areas where we haven't had snow guns before and So, for example, in Tegelfjäll in Åre, where we had difficulties last year to open up, we have now put in snow guns, and we have exchanged some other ones. So everything we are planning for and where we three years ago took a decision to increase the spend within investment in snow production, this is part of this, you can say. Then, of course, when you get more natural snow, as you say, that is helping us but you must always have this artificial snow because the artificial snow is helping you to put the layer in the bottom which is providing or secure a long season and where we don't have artificial snow production in some slopes meaning that we can open up them much earlier than we normally do And normally we produce snow, last year we started to produce snow November 17, and now this year we end snow production around December 15, meaning four to six weeks earlier than we did it last year, for example. So I think just to get an understanding of the cost we have in this quarter is, of course, higher energy costs since... are producing more snow however since we have had these good temperatures we believe that we have done it in an efficient way then we have of course higher cost for the hvo 100 diesel for our snowmobiles when they need to put out the snow snow in the slopes so all that and also some more staff as we needed to use more staff hours to do this in November versus last year. So I think it was a long answer on your question but just to get an understanding I think for all on this call that we are super glad for having so much snow and also the natural snow meaning that you can start to go with the whole experience for the customer becomes much better when you also have more natural snow and areas for example in Vemdalen in Storhogna where we don't have artificial snow production where we had some difficulties last year now it's fully open in Storhogna as an example and that is of course give a better customer experience in general. Martin would like to add something.

Just one comment also. We took the opportunity to produce snow when it was really cold and efficient way. We have not produced more snow than last year. But we have produced it in a different month.

And more efficient.

That's important to say.

And also the snowmobiles we are using in our company, we have also invested in equipment, meaning that we are measuring how much snow we put out in the slopes. And that means that we can be more efficient and also much more precise on the depth of the snow we are producing. meaning that we, in general, in the past, we were not so smart in how we put it. It was more on a feeling or experience, and now we are using the artificial intelligence and doing this in a much more efficient way. The second question was around... Yeah, and then the question around staff, then it's actually very easy to answer on because it is the acquisition of Trysil guides. meaning the number of increased staff. So not more difficult than that actually.

Okay perfect, thank you.

The next question comes from Stefan Sternholm from Nordea. Please go ahead.

Hi Stefan here, follow up on this new production. Is it fair to assume that the cost for this new production will be some 15 to 20 million less in fiscal Q2?

It's still too early to say, but we need to summarize December and January to make the conclusion. But of course, we have moved one month earlier. So when we look at the electricity cost, of course, it has increased a lot compared to last year. how much we have used for snow production so we will have effects from this in the second quarter lower cost in the second quarter sure if it will end up to 20 million more or less than that that's a little bit too early to say okay I understand and another one on this very strong bookings ahead of the winter season which seems very promising

Can you divide this 9% into international guests and also how it looks like for Swedes and Norwegians?

I can give an answer on that. You can say previous we have had around 70% Swedish guests and then we have around 20%. 22 percent Danish and then the rest has been from other countries now you can see that the Danish guests are taking a higher share so they're going up from this 22 up to 25 26 percent and then you are increasing also from one to two percent of the of the British guests etc so You can see a little lower percentage than of Swedish guests and a higher percentage of international guests, moving around 5 to 7%. We are not ready with the season, Stefan, but between 5 and 7% higher share of international guests compared to Swedish guests.

Great to hear. And volumes up 9%. Is it fair to assume also some support from pricing?

Volume is not up 9%. I think the pre-booking is up 9%. But since the pre-booking is up 9%, we can see that we will most hopefully since the season is not ended, of course, but we can clearly see the strong demand from Booking and we believe of course that we should see an increase this season compared to last year and mainly in the end of the season where we had some challenges last year and we have a pricing increase of 5.4% in our pricing however we also have a pricing model meaning that as closer you come to to buy your ski pass for example as more expensive it will be so we will see we have a clear pre-booking of all the areas like ski school ski pass ski rental but again if the customer choose to buy just the day before they need to pay maybe not only 5.4 maybe 7% higher price So let's see what the impact will be when we close the quarter and the season.

Okay, thank you very much. No further questions?

The next question comes from Carl Johan Bonnevier from DNB Markets. Please go ahead.

Yes, good morning, Stefan and Martin. Just to continue on Stefan's previous question, do you see any price movement also in the accommodation cost for the guests? Because I guess the 5.4% relates to the ski passes, or am I wrong there?

You are absolutely right. Sorry, I was maybe not fully clear. The 5.4% is, of course, not of course, but they are related to the ski pass sales. And since we have pricing... which is related to how the demand is, we are increasing, of course, the pricing on also the housing as well. So since we have seen, for example, if you take the week seven, which is the winter break for the Danish guests, the main week for Danish guests, it has been extremely hard to find any accommodation. And then, of course, the price increased that week quite dramatically. And since the Danish guests have a lot of money in the wallet, they have been able to pay that amount as well. So I think not a super clear answer on your question, but since we are the pricing model, meaning that... We have dynamic pricing modeling, meaning also that increased demand, increased price.

So if you move that question further than maybe into the hotel operation, if you're looking at your own hotels, what kind of price movement should we expect or hope for in that segment for this year?

That's a good question but we use the same dynamic price model but in the bottom the prices have gone up compared to last year if you look at the price list also on accommodation.

Yes.

And then depending on when you make the booking so it's the same answer on the hotel segment as on the other accommodation.

Excellent. So a good proxy would be to use maybe the general kind of price movements we see in average room rate and rev par in the whole Swedish market or Scandinavian market or something like that for also to be the benefit that you might be seeing.

I think what I just want to, it's a fair way to look at it. At the same time, if you look into the Scandinavian hotel market, it's not a seasonal hotel market, and I think that is where we differentiate compared to, for example, Scandic or the other hotel chains, because I've spoke to some of the CEOs there, and they have increased the price quite rapidly, and we are not able to increase the price in the same way, because Our model is to bring the customers up to our destinations and then they spend at our destination. So we have a different business model, so to say. I mean, if you look into Scandic business model, they want to fill the room rates and they increase the price all the time. We will, of course, want to fill our rooms, but we would like our customers to spend money on ski pass, ski school and ski rental. and also eat in our restaurants. That is how we want it to be. So there we have different price models. So yes, we have increased our prices, but I think it is not fair to assume that we have the same price modeling as the hotel in general.

Makes total sense. And when you look at this object night growth of 9%, What kind of normal transition would you have of that looking at ski pass sales growth and ski rental sales growth and the other ancillary services?

Look at Martin. He looks at me. That's a good question, KJ.

I think it's difficult to say that we will move the whole 9% to it. to all other products because it depends on, of course, what kind of ski pass they buy. We see changes there also in patterns. So there are other variations, but it will give a direction of where we see that the sales and the volume are going.

I can understand the difficulty of answering it, but I guess it should be a good proxy for growth in all business areas, at least for you.

I mean, it should be. I mean, if you just look into, if we say that we have an increase of Danish guests by 30%, and we know that the Danish guests buy not only ski paths, we know that they buy the whole shaboom the whole package so that's what I mean I think it's a fair assumption to say that the Danish guests are helping us to sell more of everything and we can see that actually when you look into the booking pattern now and also the revenue we have in our when the sales numbers we have where we have an increase in booking of everything actually and that we can see but then of course it's too early to say where we end up in the season but but the the early is showing uh tell about what you're asking well that's fair that's fair so uh

Just also a question on the property development side and the hotel side. Looking at property development, looking at the pipeline for a project you see coming into harvesting during this year, where do you think it will end up?

We know, as you know, KJ, we never give any forecast on this. But if I say like this, we have given an estimation to all of you during the capital market day that we will be in the ballpark between 70 to 90 million per year and we have no reason to change that estimate this year so right now that is where we are heading for and then exactly where we will land that the CISO will show but we have no reason to show any other numbers than the one we gave in during the capital market day.

Excellent and the hotel side do you feel confident getting close to break even or into black numbers during this year?

Maybe it's a little bit too early to say that we will get into the black numbers for the hotel. But what we can see in this quarter, they have been really efficient on the cost side to optimize on that. So we are taking actions in the right way. If we will reach the whole way to break even, maybe it's a little bit too early to say that. But we are aiming absolutely towards that.

Good, good. I also noticed that you changed the debt profile of the company slightly, more short-term debt and less long-term. Is that awaiting a refinancing that is going on or is there a new policy that you're enacting?

No, that could be something like that that you said. No, it's not a change in direction. It's just that we want to make everything okay to look at how we want to finance it going forward. So we will be able to come back to that next quarter or the quarter after that.

Excellent. Thank you very much and all the best out there.

Thank you. Thank you.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Warm thank you for the interest in this conference call. Also warm thanks for the questions you asked because they probably hopefully helped everyone on this call to get some clarification. So I wish by this we wish you all happy holidays and we are really glad to open up and welcoming all our Christmas guests this week. So thanks and Talk to you all during next quarter presentation in March. Thank you so much.