Sats ASA (SATS) Earnings Call Transcript
October 27, 2026
Earnings Call Speaker Segments
Hi, everyone, and welcome to the Q&A session for SATS Q3 results. I'm Stine, Investor Relations, and I'm here with CEO, Sondre Gravir; and CFO, Cecilie Elde. Sondre will start with a short recap of the key highlights from the quarter, and then we will open the floor for your questions.
Thank you, Stine, and good morning, everyone. So great to see so many people on the call. Welcome to all of you. I will be very brief, just summarizing the highlights from the presentation today, and then we'll dive directly into Q&A. This is another quarter in the right, but also the same direction as the last quarters have been. Underlying, we see that the activity level in our member base is continuing to increase. We see that more members, 6% more members are joining our group training classes. These are important KPIs, as we have mentioned earlier, because they say something about the loyalty and stickiness in the member base, so increased activity is good for future member development and earnings. And then we see a 7% increase in revenue, currency-adjusted. This quarter, there are larger differences between the reported and currency-adjusted numbers compared to normal. So it's 7% currency-adjusted revenue increase. This is then primarily driven from higher value per member. Volume, as Cecilie commented on in the presentation, has been affected by the fact that we have closed in total 8 clubs and from the introduction of VAT in Denmark. But except from that, we see a positive underlying volume development for SATS in Norway and Sweden and ELIXIA in Finland. EBITDA in the quarter is up 25% currency-adjusted to NOK 235 million. The margin has increased from 15% to 18% and EBIT is up 35% currency adjusted. So we continue the same trend where we see the operational leverage coming to life, where we see a significantly stronger improvement in the result than on the top line growth and a stronger growth in EBIT compared to EBITDA, which is the operating leverage in practice. We also see that earnings per share is up 43% to NOK 0.69. We have a free cash flow in the quarter -- sorry, over the last 12 months of NOK 609 million, and the leverage is kept steady at 1.1 this quarter, and that's the fourth quarter in a row. We have also then returned NOK 193 million to shareholders. We have done a dividend payment of NOK 0.72 per share, which is an increase from the NOK 0.67, which was the last dividend payment, and we have done NOK 54 million in share buybacks. So, so far this year, we have bought back 4.4% of the shares in SATS. We also gave an update. I would say that it's not a new direction. It's just a clarification of the current capital allocation principles. Following the last couple of quarters, we have extended the net debt-to-EBITDA leverage range from -- it used to be 1.5 to 2. We have widened that range now. So it's now 1.0 to 2.0. That's just a reflection of the strong cash generation we have had over the last couple of quarters, which we expect that will continue. And we have been at the leverage at 1.1 now for 4 quarters. So it was natural to widen the range for us. And we continue with the capital allocation principles. Number one, we will invest 5% of revenues to upgrade and maintain our current club portfolio. Number two, we will open 8 to 12 new clubs per year. Now we have 18 confirmed in the pipeline until 2028. Then thirdly, we will keep leverage between 1.0 to 2.0. And then we will continue with half-year dividend payments, semi-annual dividend payments that will be stable and increasing over time. And we will do regular share buybacks also going forward. And again, so far this year, we have bought back 4.4% of the shares. So the capital allocation principles are kept in the same direction. It's just a clarification compared with what we communicated to the market at Capital Markets Day May 2025. So that's the highlights from the quarter and the clarification on the capital allocation principles. With that, we'll open the floor for questions.
Ole Martin Westgaard.
Just a question on the sort of order intake of new members in the quarter. Was this in line with your expectations? And can you give some comments on how we should expect Q4 with regards to seasonality and timing of campaigns and so on?
Yes. I think when we started the year, when we reported our fourth quarter results, I think we commented on the price increase and what we then expected from volume in this year as a consequence of that. So you know that 2025 was an exceptionally strong year in terms of volume. But with price increases, we know that, that will have some effect on volume, and that's what we've seen in recent quarters and also in the third quarter. So if you look historically, this quarter is more in line with what we have delivered previously. In 2024, we had a net growth in the third quarter of 9,000 members, and now we deliver 8,000. And when we look at the member development year-over-year, as I described in the presentation, we have closed quite a few clubs and that has caused a decline in the member base. And we also see that the impact the VAT introduction in Denmark has had on volumes in Denmark also affected somewhat. But what's important for us is that we see that in our main brand, the SATS brand, we see a strong development still in Norway, Sweden and Finland. Somewhat more competitive in the low-cost end of the market in Norway. But other than that, it's mainly in line with our expectations at the beginning of the year. So seasonally, the fourth quarter should be like a normal quarter, but you just have to take into account that 2025 was a very strong volume intake year for us.
Okay. And just on your comment there on the low-cost part of the market in Norway being more competitive. How big is your exposure to that segment now? And how did that impact the figures for Norway, if you can make any sort of comments on that?
Yes, we don't report specifically neither on financials nor member development on Fresh Fitness versus SATS. But of course, SATS is by far the largest components in the Norwegian figures. But we wanted to highlight the development in the low-cost segment in Norway, specifically on the slide showing the member base. And as Cecilie is commenting on, even though we're not reporting on the figures, the development for SATS in Norway is positive and according to expectations. And then the competitive landscape in the Norwegian low-cost industry, I think part of the industry, I think there's no major changes here. There is no -- we are still positive to the longer-term development of Fresh Fitness. But I think for those following this industry closely, if you look at the campaign pressure in the market now and if you look at what some of the operators are promoting at the moment where you can -- for a long period already, you can train for free without any binding until February 2027. I think that illustrates the competitive situation in the low-cost part of the market in Norway at the moment. There's been a significant number of new club openings over the last 24 months in that part of the market. So I think it's a fight for volume. And we fight in that fight with Fresh Fitness, of course, but we do it long term, and we don't jump into completely what we see as crazy campaigns.
And just on that note, I'm not specifically talking about Norway. But I guess we're entering the period of the year where we start to look at next year and what level of price increases do you expect. How do you see the room for continued price increases along the lines we've seen for the last couple of years in the different markets now? Do you still believe that there is room to grow this? And how much mix support do you think it's possible to get in Sweden, for instance?
I won't comment specifically on, of course, the expected price increases. I think you all understand that. But as we have commented on earlier, we focus on the total revenue development. And then in periods, that is driven mainly by volume and other periods of price. Now this quarter is typical where you see mainly the whole -- or the whole revenue increase is driven by average revenue per member increase. We expect prices to further increase in the Nordic market going forward as also the underlying inflation is there, though not as high as it used to be. But the mix effect of seeing that members are buying access to, for example, all group training classes also in Stockholm since we are specific about Sweden, that positive effect we expect to continue.
Hakon Fuglu.
We talked a bit previously about ancillary and that you've been investing behind that, something that's been missing for the last 2 to 4 years. We're seeing some increased ancillary yields now. Is this sort of the run rate that we could expect going forward? And what's the -- and how is the consumers taking this investment?
If by ancillary, you are talking about personal training and retail then yes, we see a positive development within that area, and we expect that to continue going forward as well. That has been an area where we have been declining after the COVID period and slowly improving, but we still believe that there is a significant market for personal training going forward. So that will be an area where we continue to push and invest. And hopefully, we will see some impact of that in the year to come.
And you still expect that you could increase the yields on the membership base while at the same time, continue to increase ancillary yields as well?
Yes. And of course, the membership yield is separate from sort of the add-on services like personal training. So underlying, that should be definitely possible to improve, yes.
And a bit on the member base that you have, could you explain a bit on how the product mix is? It seems like you're facing higher competition on the lower price segment, but are you seeing higher quality on the membership base now with lower member growth as well?
Yes. So the share of passive members is coming down. And we reported on the back -- if you think back to the Capital Markets Day, we reported that we're increasing visits per member. We saw the increases in the group training sessions, and then we saw improvement in NPS, the member satisfaction and member feedback. That has continued. And on the Capital Markets Day, we reported that, that had led to a 9% reduction in churn compared to the IPO. And of course, as we are not reporting on all these numbers detailed quarter-by-quarter. But when you have 6% more members, now joining our classes compared to last year, as we do report on in this quarter, that has an effect. So we see that activities per member or visits per member is up 2%. So we see more active members, lower share of passive members, and we see a higher share of group training, which we have said earlier, a group training member has a member duration, which is 1.8x higher than a non-group training member. So these are small numbers, it seems like. But over time, as we also commented on in the presentation today, it's these small steps quarter-by-quarter that underlying will make also a profit increase going forward.
And in terms of the group training offering, I believe that you increased that by some 16% the second half last year year-over-year. Could you give some comments on the figure for this half year compared to last year?
So we have continued to increase the group training offering. The increase is lower than what we had last year, but we still see an increase in the cost related to that, but that's something that we target against the visits that we see. We monitor the load factor and add classes when we see that, that's necessary. So it's lower, but still an increase. So that increases the cost by around 0.5 percentage points related to that.
And we expect also to increase our group training offering going forward. And this is not a stable number per half year, as you alluded to and as Cecilie is commenting on because this is something we continuously optimize. We continuously optimize the schedule based on member visits, based on member feedback and then based on the load factor on the classes and based -- and we also launch new products and upgrade our clubs and launch new ones. So this is, so to say, an ongoing work, which is monitored closely, I would say, daily, if not hourly.
And just a final one for me. And I see that you signed up further club openings in this quarter as well. How does the pipeline look from now? Do you see further opportunities? Or are we starting to look stretched on the possibilities in the markets and especially how do you view white spaces in Sweden?
Yes. We've confirmed some more committed clubs this quarter compared to last quarter. So now it's 18 clubs from '26 throughout '28 confirmed. This is fully in line with our guiding to the market of opening 8 to 12 new clubs per year, and then it has taken some time. We commented on this new guidance to the market all the way back to the Capital Markets Day in May '25, and that's taken some time to come up to that run rate. And we have been clear all the way, we prioritize quality above quantity. We could easily have come up to this number a year ago. But we really want to make sure that each of the new locations we signed, there are 10 years rent contracts, big commitments. We need to make sure that these business cases are super strong, both in terms of adding value to the existing member base, but also making sure that we actually add net growth from the openings. That's why it's taken some time. Now the pipeline starts to be good. We are very happy with a few of those locations, strategically very important location that we have signed for us in white spot areas. And we will continue to sign new locations. But again, we are very prudent and will not sign if we are not sure that the business case will deliver.
Tomas Helgo.
How much of the 7% ARPM uplift came from the easy comparison with last year's campaign? That will be my first question.
Just not much. I mean, in general, it's price increases and mix improvement that's driving the revenue uplift, currency-adjusted. So we had a strong campaign last year with some more members on lower-priced memberships. So it's not material. The other 2 impacts is the most important ones.
Okay. And then in terms of offering to new members, did you offer a longer free period last year compared to this year?
No. Overall, the campaign was fairly the same. But since we've increased prices during this year, we see that -- we see somewhat lower impact on that campaign as we expected.
Any other questions? No. Thank you. Thank you for joining.
Thank you all. Have a great day.
Have a great day. Thank you.
Thank you.
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