Global X Health & Wellness ETF Price & Performance (BFIT)

With me today are CEO, Rene Mohs, and CFO, Maurice de Claire. And in this call, Rene will give a short introduction, after which both Rene and Maurice will be available for questions. This call is being broadcast live on our website a recording of the call will be available shortly afterwards. As usual, I look I would like to point out that safe harbor applies. And with that, Renee, I hand it over to you.

Thank you, Richard, and welcome everyone to today's call.

As stated in our press release this morning, we are pleased to report strong growth figures for the first three months of this year.

We are comfortable with our full year guidance as communicated in the full year 2024 earnings release.

A few weeks ago.

During the first three months, we expanded our club network by 41 clubs, reaching a total of 1,616. Up from 1,506 clubs in the first quarter of twenty twenty four. In Q1, we opened 43 and closed two clubs. We opened 17 new clubs in France, where we now operate eight seventy five clubs.

In Spain, we increased our club network by 11 to two twenty clubs.

In Benelux, we increased the number of clubs year to date by four to four eighty four. In Germany, we increased the number of clubs by nine to 37 clubs.

Our membership base grew by 213,000. To 4,470,000.

Representing a 10% increase year on year.

All countries experienced growth, which France and Spain showing the strongest performance. The membership growth in France was partly driven by our successful 20 fourseven club openings. Compared to last year, our revenue for the first three months increased by 17% year on year. To $332,000,000 The increase in results was a result of a strong growth in memberships, combined with a higher average revenue per member. Partly offset by one sales day less as 2024 was a leap year. The average revenue per member per month in the first quarter increased to $24.25 compared to $23.57 during the same period last year. The important in average yield was partly driven by the introduction of a new membership structure. In the beginning of 2025 with three options, comfort priced at $24.99, premium, priced at $29.99, and Ultimate, priced at $34.99.

The main difference from previous membership structure is that premium members can now bring a friend only once a week compared to two the unlimited times previously. While ultimate members can bring a friend at any time and freeze their membership two times four weeks a year.

This membership structure is implemented in all countries except for Germany.

So far, we see very positive results in terms of uptake of the ultimate and premium membership across all regions. Similar to premium uptake in prior membership structure.

The positive results in the first three months of the year put us in a good to achieve our full year targets. As outlined in our full year earnings release in March. We are on track to add 100 clubs to our club network and achieve revenue of between 1.375 and €1,425,000,000 in 2025.

We also maintain our outlook for underlying EBITDA less rent, of between EUR $330,000,000 and EUR $370,000,000 in 2025. And for overhead costs, including marketing as a percentage of revenue, of between 11.512%.

We are very happy to announce that we have secured a new EUR 200,000,000 revolving credit facility with ABN AMRO and Rabobank. Set to mature in June 2027.

With this additional facility and our positive free cash flow in 2025 and 2026, we expect to have enough financial liquidity and meet any [indiscernible] holders who choose to their put option in June 26.

We expect to launch the EUR 40,000,000 share repurchase program in Q2 twenty twenty five.

And reduce our leverage to below 2x in 2026.

With that, I conclude the presentation and Maurice and I can now questions.

Operator, please open the line for questions.

Thank you, sir. If you like to ask a question at this time, please press star key. Followed by digit one 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 your question has already been answered, you may remove yourself from queue by pressing star 2.

Again, please press star 1 to ask a question. We will pause for just a moment to allow every to signal. We will take our first question from Mark Wiesenberg, ING. Your line is open. Please go ahead.

Yeah. Good afternoon, everybody, and thanks for taking my questions. My first question is on the clubs in France, the 20 fourseven clubs. Renee, maybe can you give a bit more color on the the in growth you're seeing there that would cover for the [indiscernible] Can you give a bit more color maybe how these clubs are performing versus other let's say, mature clubs in in France? Yep. Okay. Sure.

Let's take them one by one. Yes. We see already in the first quarter that we see much better results. So yes, we're comfortable we'll be able to absorb the 35,000,000 additional cost definitely in 2026. So we'll take this year to grow to the amount of extra members that we need to cover that cost. And yes, of course, it is very costly, but yes, we focus on being there for our members. So we try to lower the hurdles for people to join. And next to price, always open is crucially important. And as you know, we have made huge investment in technology and systems which really allows us to operate in the Benelux without staff.

And that works really well. We can't do this yet in France, but we really believe that in the future, that will also happen. And again, that is what we hope and expect But if that doesn't happen, then in time, we can change to a more efficient option because, yes, currently we're working with a structure that we can stop any month. And that is actually a costly affair. So you're basically saying that if the situation stays at an prompt that you have to have someone in in in the gym, If if it's % sure that it that is the law going forward, that you will transfer maybe to a more a cheaper it yourself model or so. Is that is that basically That's exactly what I'm trying to say. Yeah. So So meaning, we now outsource it with where we can cancel it on a monthly base. That's costly. So if it's clear that it's never going to happen, then we will do it with staff, and then it will be yeah, around half of the cost that we're paying currently.

And if it's in a more positive will be that that you are allowed to do it staffers and you can kick them out in a month time. That's what Correct. That is actually, what we are expecting.

Okay. And then maybe on the can you give us maybe some numbers on the on the twenty four seven gyms? Are are they indeed showing, let's say, more than 30 at least 30 more member in growth versus a normal club. Is it is it something you're seeing? Because you run the pilots, you have now three months of in growth promotions. Is that what you're seeing?

Yes. Of course, the first quarter, you always have more joiners than, let's say, the summer period. So you cannot say it exactly, but what we have seen till now, till April, we see definitely a good in growth that we can reach this yeah, around 300 members on that 20 fourseven club. Don't really look at it that way. We actually look at it at like if you have one club 20 fourseven, then the yes, the clubs around it can also use it. So we're looking at we need around 100,000 extra members. And, yeah, if you have a cluster of three clubs, then we do one club twenty four seven.

So, yeah, all in total, we need a hundred thousand extra members more or less in France, and we're comfortable that we will reach that this year.

Okay. Very clear. Then a question, I think maybe for Maurice, is on the on the refinancing of the convertible. So you secured now facility, the 200,000,000 facility. That there's still, say, a hundred million that you need to generate from your free cash flow. Give and take that your free cash flow, for whatever reason, does not come up to, let's say, a hundred million by June year. You have enough flexibility then to still manage that with your clip rolled out or with with your your payables that you can yeah, bridge that gap and and be absolutely sure that you can finance it from your [indiscernible] Yes. Good question, Mark. Yeah. So yeah, first of all, we're we're quite comfortable that we we will have an cash flow to repay the remainder of the convertible bond of €100,000,000 But we also actually quite flexible in our club openings and also in the timing of our club openings. So the answer is yes.

Yeah.

Yeah. So you're not, by contract obliged for them, let's say, in in the first half of next year, you can phase it to the second half if needed. If if if you could fall short a bit.

Yeah. Well, of course, some of some of our clubs are already contracted, and and we will open them at the beginning of twenty six, but we are still flexible.

Okay.

And then maybe on the on the guidance you still have pending there from the Capital Market Day. So the €460,000 per mature club. I think the question was also asked for the full year numbers there, but is given what you given the investment you're doing in France, is it then logical to assume that it's more a guidance, let's say, for '27? And and do you believe still that it's feasible? Given the trends you're seeing in your end market?

Yeah. I think it's it's the 460,000 per mature club is definitely [indiscernible] If you look at the 1,200 mature clubs that we have now, that means we need 200 more members.

I really see no reason that we will not reach that, especially taking into account the low fitness penetration in the countries where we're active. So yes, there's still a lot of room for growth Not sure if it's going to be 26 or 27, We have a combination of new club openings and we still have call them the corona openings. So but we are convinced in time just don't know exactly which month, which year, but in the near future we will we are very comfortable that we reached the 460,000 EBITDA on a mature club.

And maybe a final one for me. It was on the press release, but is there any to mention or some information about the franchise business still on track some for for the second half launch?

Or Yeah. So we we only want to announce when we have concrete steps. So we will announce more detail in time, but we need to have a good contract with the right partners We will take the time that we need to do this. So it's not really a deadline for us, but understand your question. So our advice for modeling purposes don't expect any meaningful contribution in 2025 or meaningful in 2026 from franchise. We want to start with the right partner with the right contract.

But it's still on track?

It's still on track.

I might have a follow-up later on, but I'll leave the floor now for someone else to, to also ask a question. Thanks very much.

Thank you.

Thank you.

We will take our next question from Robert Wass ABN AMRO. Your line is open. Please go ahead.

Yes. Hi. Good afternoon, everyone. I have a couple of questions as well.

You you added quite a few members in in q one. That was already flagged at the full year results. Can you share with us what the number of memberships would be in 2025 in your base case scenario? It's my first question. [indiscernible] Yeah. I'm not sure. As we, has explained a few weeks ago is that we want to focus on two things, turnover and EBITDA. So we do not really want to communicate, on on growth, just looking backwards. So every quarter, we will communicate how many member in growth we expect. But if you look at last year, when we grew it around 450,000 members, and around a 80 clubs, We will do less clubs now, so 80 clubs less. So logical, it would be a little bit, less growth this year than last year. But, again, we don't wanna communicate really set the the amount. We just took that out. We want to focus on EBITDA and turnover.

Okay. Thanks. Yeah. You already said something about the the twenty four seven clubs in France concerning memberships. But I was wondering, the additional costs that you that you flagged. Is the conclusion in Q1 Are the additional costs for these 20 fourseven clubs in in line with your expectation range in Q1? Yes. K. Maybe a question for Maurice. On the €200,000,000 facility. Is that facility fully linked to the convertible In other words, what happens if there are no redemptions in the theoretical case? Does the facility then cease to exist or do you still have it then for the year thereafter?

Yeah. Robert John, as as you're right. So the new facility is is linked to the redemption of the convertible bonds. And but but if if our convertible bondholders and everyone has has has the ability to decide for themselves, so has or no not it's not a zero one, situation. If they're all staying in, then we don't need a facility, and we will not use it.

K. Thanks. The next question is about the pipeline, the craft that you're always put in the press release at the end. It shows that 31 clubs are under construction currently. This mean that you will open the four clubs that you have already opened in the quarter plus these 31 clubs in Q2? And if not, can you maybe then elaborate a bit on the phasing of club openings in in 2025?

Yes. So we will still open the clubs in April, May, even though when the clubs are finished in June or July, we will not open them. So that could be that the clubs are ready in June and we open them August.

And in general about the phasing because you're you're already 41% completed. You for 41%, basically, you completed your your ambition to to open approximate 100 clubs. Is it the rest of the not not much in q four, I assume, and the rest even is split between Q2 and Q3 roughly?

Yes. So our focus is always opening as many clubs as possible in January, February, and opening as many clubs as possible in September, October. Ideal period to open clubs, so January, September. But yes, that's not possible to have all the builders So take that that never works, but we try to manage that to get as close as many clubs open in that period And also sometimes, you know, we we we take our time to open the club. So we start build outs a bit later because of the fact that don't want to open them in June. So then the let's say, the rent contract started, but we start one or two months later. So we can play with that.

Also sometimes builders want to start because they have the staff and don't have any work.

Then we make an arrangement saying, okay, you can start, but we will pay you later.

So many different, but of course, we know and we have been doing that for the last many, many years.

Will manage the cash flow that we have available with the openings that we can afford.

Those were my questions. Thank you.

Thank you. We will take our next question from Tim Hellas, Kepler Cheuvreux. Your line is open. Please go ahead.

Hi. Good afternoon, everyone. Thanks for taking my question. So the first one would be about the new membership. Structure, you're going to introduce. Across the geographies. And my question would be, could you maybe explain your thinking behind it? And especially if I look at the change you just made very recently in France when you introduced the weekly subscription again. And what you hope will happen with that new membership structure.

I mean, I get it that you eventually wanna get rid of the premium bring another person situation. But, yeah, could you maybe explain it a little bit? The the way of thinking behind it?

Yeah.

So what we we we always test, different things. In the market, not only in fitness, but in all kinds of other businesses as well. So what is happening in members especially phone memberships and so on, So what is happening? What are people trying? What works? Of course, we build clubs where you can easily put in 4,000, 4,005 people. We don't have that yet, so we we're always happy to see more members join. So we always look at the right balance between amount of members and yield. Of course, if we lower the price to EUR10, we will have more members. So it has to be a combination between the yield and the of members. So we're trying to optimize that. So for that, try different things. So we try we have started now with the ultimate making it more expensive.

Because what we actually saw is that even though they didn't really really see the huge difference between premium and and the ultimate. You see that a lot of people really tend to go to the higher the people who are have the money and want the best membership are actually easily stepping over €5 extra put that way. So we see actually a bigger group of people going for the premium going for the ultimate instead of the premium. So overall, keep testing. So we tested the price per week, that didn't make a big difference. So we stopped at that. This is actually working. We We've tested it in the end of last year. We rolled it out in all countries except for Germany this year, since January 1.

And we saw very good member in growth, but also a very good mix.

You didn't see that immediately in the yield in the first first quarter, but that's a seasonal thing. The people start with the big promotion. But you will definitely see some increase in the yields in, let's say, the coming year.

Okay, great. So basically, you found out is that in France, customers are less sensitive to higher prices eventually. If I look at it, you basically increase the base price by €5, so by 25%.

That's correct. Yeah. Okay.

Great. Thanks for that. Then my next question would be about the openings. I mean, you saw in Q1 that the openings were as last year, highly skewed towards France and Spain. Is that how we also should look at the openings that are still coming in the rest of the year? That most of them will take place in those two regions?

Yes. Yes, I would say that we will see so we had nine openings in Germany. Yes, I would say that you look at the mix of the first quarter, something similar you will see in the rest of the correct?

Okay, great. Talking about Germany, could you maybe comment a bit on the market situation there and how you see things [indiscernible] the good interest as the membership increase according to your expectation?

Yeah. So the clubs we opened in the beginning, so the first 10 clubs were not very successful. I must say the last 10 clubs are very successful or actually the last more than the last 10 clubs. So it's going the right direction. We are new in Germany, so of course, always a bit more money. So you spend a bit more marketing and you're unknown, so you fight yourself into the market. Have 37 clubs open now. We will open a lot more sales the coming period. So yes, once we have this 50, 60 clubs and we are focusing on four regions now, I think you will see a good in growth of members.

Okay. Great. And the reason why the yeah. Sorry.

Yeah. The reason why the first 10 clubs were not very successful is combination of things. Also, the competitors opening not opening, but giving six months for €1 didn't help. We charge more. We thought EUR 1 for six months is not a lot, So that didn't help. But of course, you cannot do that if we keep opening clubs you cannot keep giving six months for €1 So they clearly stopped with that. And so now it's a more normal situation. But yeah, I think Germany is a very big country. A lot of people, good economic sticky members. So we are comfortable that for us will be a successful country in time.

Okay.

Sorry. One last question about Germany, then I'll leave you alone. You're not afraid that due to the quite high level of competition in Germany, that you have to eventually just compete on prices and the yields would be quite under pressure in Germany.

No. I think there's actually low competition personally. So when you look at the German fitness chains, they growing, but they're growing by acquisitions. So they just put a new logo on a gym, and then they're growing as a company. But of course, you're not growing the market by just buying from each other. You're growing the market by opening new clubs. That's really not happening. So if you look at the bigger change in Germany, they grow extremely slow. And it is a huge market. And the fitness penetration is is very low if you compare it to The Netherlands, for example, And and on that amount of inhabitants, there's a huge opportunity in Germany for growth.

Okay. Thanks. That was very helpful.

Thank you. Thank you.

Once again, if you like to ask a question, please press 1 on your telephone keypad. We will take our next question from Lynn Hoteket KBC Securities. Your line is open. Please go ahead. Good afternoon, everyone. I've got some questions regarding the the tariffs. In case you have starts with the tariffs from, from The US, in case Trump starts with retaliating tariffs, what will be the impact on your expansion topics for the fitness equipment?

Yeah. So we're not buying anything from The US, so that helps.

So we will not have any significant impact. We buy from European and Asian countries. So the Trump tariffs will not have an effect on our club openings or our club, cost. But, yeah, it's course, yeah, a lot of things happening, so that, the tariffs could be a problem. Recession, you read in the paper could be a problem. Also, example, if you talk about recession, we believe really that our membership development is will be really robust in a period like that. Yeah. I've been in the business for more than forty years now, and we've seen a lot of things happening. Interest extremely high, recession low. So a lot of things happen in the period and people cut back on big purchases like car and big trips and TV screens and so on, but they really do not cut back on their health and social life. So, it is really, for us, of course, we don't hope there will be a recession clearly, but if there's a recession we think we will not be hit. At least in the past, actually grew in that period, because keep in mind that that we are a low cost company, so we might benefit actually from downgrading people have now higher membership while we have exactly the same equipment.

So it could work in our favor. Again, we're not hoping on trade wars and we're not hoping on recession, but if it happens, we don't think we get hurt.

Yeah. K. Perfect. You actually answered my second question as well.

So thanks for that. Have a nice day.

Thank you, Lynn.

We take our next question from Natasha Brilliant, UBS. Your line is open. Please ahead.

Thank you very much. Two questions for me. The new facility and apologies if I missed it, but have you said what the interest rates is and how we should think about interest cost for next year for your assume that the put option is exercised and that you use the RCF, just what we should factor in for interest costs for next year. Then the second question, just coming back to your comments on the macro, anything to comment in the most recent weeks, any pickup in bad debt? Any particular markets, or just anything to call out that that has changed?

Thank you. Thank you, Natasha. As to your first question about, about the interest, all the cost of the new bank facility is a bit higher than the cost of our current bank facility. But at the end of the day, it will not have any meaningful impact on our financing cost this year. Of course, in the next 2026, I expect we expect an increase, because, if we if the convertible bond is redeemed, then the 1.5% coupon is out. So not, not a lot for this year and some uptake for 2026. And then maybe you could repeat your your second question was about debt debt write offs.

Yes. Just whether in you know, given the macro and and given the volatility, whether there's anything to call out from trading in the last few weeks or through April in terms of bad debts or anything else, any change in trends really?

Yeah. So we haven't if if if we take a look at that in a somewhat broader perspective, then over the past few years. After COVID, we had a big cleanup in our beds and then an in growth in '20 twenty three. And we expect to be on a stable level right now. So for the remainder of the year, no no surprises. We expect no surprise.

If you look currently at the period that we have been through this year, so till, let's say, April, what we see is that the churn is lower. So we have more sticky members as we are. And the write offs maybe also good to say is the more we go south, so the more we go to France and Spain, the more membership we have over there. There we have a larger part of members that with with lesser good paying discipline. So the more we grow in those countries, the bigger debt write offs we will have. But it's a limited percentage. So overall, the macro bad debt of course, which on average, we charge EUR 25 a month, So that is not really a big impact on people. And again, what I said before, it's less of your life, so it's also people visit us a lot, and it's a social thing. And you cannot enter when you didn't pay. So people who want to join and want to work out yes, they have to pay it, let's say, on average 20 what is it, €24.

You know?

Okay. That's clear. Can I just come back on the comment I might be interested rate? Are you able to quantify what the increased cost will be for 2026?

No, Natasha. We're we're not getting into that much detail.

Okay.

Maybe maybe to add to that, it is not a huge uptake. So what we're paying our current what we are paying our current, banks it is not more than 50% more. As an example. So it's a limited increase to what we are paying on our current bank debt.

Okay.

Thank you. Thank you.

We have reached the end of today conference call. I would like to hand over to Richard Picard for any closing remarks. Please go ahead, sir.

Yes. Thank you. And thank you, everyone, for joining today. And if you have any follow ups at any point, please don't hesitate to call Victoria or me. Thank you. Bye bye.

Bye bye. Thank you for joining today's call. You may now disconnect.