Basic-Fit N.V. ($BFIT)

Hello, and welcome to the Basic-Fit Q1 trading update. Please note that today's conference is being recorded. [Operator Instructions] I will now turn the call over to your host for today's conference, Richard Piekaar, Head of Investor Relations. Sir, you may begin.

Well, thank you, and good afternoon, and welcome to everyone to our conference call. With me today are CEO, Rene Moos; and CFO, Maurice de Kleer. In this call, Rene and Maurice will give a short introduction, after which we will open the floor for questions. This call is being broadcast live on our website, and a recording of the call will be available shortly afterwards. And as usual, I would like to point out that safe harbor applies. And with that, I hand it over to you, Rene.

Thank you. Today, we will start by looking at the group highlights from the first quarter of 2026. As a reminder, the group consists of Basic-Fit and Clever-Fit owned and franchise clubs. We ended the quarter with [ 2,184 ] clubs, a 35% increase over the same period last year. Membership increased to 6 million up from 4.7 million in the first quarter of 2025. Revenue for the group increased by 19% year-over-year to EUR 396 million. All in all, a strong start of the year. Turning now to the Basic-Fit branded business. So excluding Clever-Fit, we grew our club footprint by 28 clubs with the majority of clubs openings in our growth markets of France, Spain and Germany. The number of memberships increased by 215,000 versus 213,000 last year. The in growth is particularly impressive given that 13 fewer clubs were opened in this quarter versus the first quarter in 2025. In total, Basic-Fit increased its memberships by 13% to 5 million. We now have an average membership club of 2,981 an 8% increase year-over-year. In the first quarter of 2026, Basic-Fit revenue increased by 15% to EUR 380 million, driven by very good member in growth in our clubs and a solid yield development in the average revenue per Basic-Fit member. We are currently the market leader in 6 out of the 12 countries where we are present. As we just saw on the previous slides, we opened 28 Basic-Fit owned clubs in this quarter and 5 Clever-Fit franchise clubs. Let's look first at our own Basic-Fit club openings. In total, we opened 29 clubs and closed 1 for a net growth of 28 clubs. We opened 8 clubs in Spain followed by Germany and France with 7 clubs, each, 5 clubs were opened in Belgium and 2 clubs opened in the Netherlands in the first quarter. During the first quarter, we opened 5 franchise clubs in the German market under the Clever-Fit label, bringing the total of franchise clubs in our markets to 440 clubs. Franchising is a key part of how we see Basic-Fit's future. In the coming period, we will introduce Basic-Fit branded franchise clubs alongside the existing Clever-Fit franchise. The first Clever-Fit franchise is expected to be rebranded to Basic-Fit in the second quarter. The aim is to reach critical mass of 200 Basic-Fit clubs in Germany in 2027, which will allow us to start nationwide marketing campaigns. We continue to see strong interest in both the Basic-Fit and Clever-Fit brands in the DACH region. Next to franchise opportunities in Germany. We have also reviewed the opportunities that exist in the other growth markets. We are considering franchising in France, where we see ample growth opportunities for the franchise business. We expect the contribution of franchise to revenue and underlying EBITDA less rent to be limited in the near term, as it will take time for franchise club growth to reach a meaningful scale. Let's now turn it over to Maurice.

Thanks, Rene. As communicated on 15th of April, we received confirmation from the French public authorities that we can operate 24/7 clubs [ starters ] in France. Under this revised amendment, we believe that approximately 200 of our French clubs will immediately qualify for 24/7 unstaffed operations. In May, we will transition 50 staff clubs to the unstaffed model. And in the summer of '26, we will be adding a further 150 unstaffed clubs. Based on the specifics of the regulation amendment, like the requirement to have a maximum of 19 people in the club when it's operating without staff. We expect to achieve annualized cost savings of approximately EUR 10 million, of which a smaller part will be realized this year. We expect that over time, further revisions to the amendment will lead to additional cost savings. For 100 clubs already in the current 24/7 staff model that do not satisfy the current criteria, we elected to keep those clubs soft. This morning, we communicated that we increased our expectations for underlying EBITDA less rents. The increase is partly based on the changes of French regulation announced on the 15th of April for staffless clubs, as I mentioned in the previous slide. In addition, the postponement of the Belgium VAT will result in a tailwind compared to the guidance given in January. It is still uncertain if and when the new VAT plans will be implemented but each month postponement results in around EUR 1 million additional underlying EBITDA less rent, and the postponement will be that is said at least 3 months. Further postponement will provide, of course, further upside. The foundation for the adjusted EBITDA guidance is a solid start of the year, which gives us confidence that to increase our expectations for underlying EBITDA less rent by EUR 10 million. We now expect group underlying EBITDA less rent of between EUR 450 million and EUR 455 million. The guidance for revenue of between EUR 164 billion and EUR 169 billion, net club growth of around 50 clubs, leverage ratio of just over 2x and a significant improvement of positive free cash flow remain unchanged. When we look at the longer term, the positive membership trends and the expected continued increase in yields will support the continued growth in revenue and underlying EBITDA less rent in the coming years. On the site level, we will continue to focus on the return on invested capital of a mature club of at least 30%. And in addition, we will focus on group return on capital of low to mid-teens in the medium term. I will elaborate more on our focus on group returns at our Capital Markets Day next week. And with this last remark, I open the floor for questions.

[Operator Instructions] The first question comes from Rob Jan Vos from ABN AMRO.

Yes. Let's do 3 then. First, on the group memberships. It was EUR 6 million at the end of Q1, can you provide maybe the exact split between owned club memberships, which is Basic-Fit and a few Clever-Fit clubs, as I understand, and the franchise memberships. That's my first question. Shall I wait or shall I continue?

No, we can answer that. So the 5 million members -- sorry, 5 million Basic-Fit members and we have around 1 million Clever-Fit members and of those EUR 1 million around 100,000 owned clubs surround -- around that number. So owned is 5 million Basic-Fit and over 100,000 Clever-Fit.

All right. That's very clear. Second question, yes, you said in the press release that you added 5 new franchise clubs in the first quarter, and that they were all Clever-Fit clubs. I would assume that with clear benefits from operating on brand instead of 2 brands, eventually, why were they all Clever-Fit clubs? Was that because of pipeline, they were about to be opened as franchise clubs or why were there -- why were they all Clever-Fit clubs? That's my second question.

Yes. So as you said, it's because of the pipeline that they were in. As you may remember, it takes at least 1, maybe 2 years to get the license. So once you started the whole program, as a Clever-Fit, then you also have to build it like a Clever-Fit. So yes, because they were in the pipeline, and you will see more openings of Clever-Fit this year for the same reason.

That's clear. And my third question is, yes, you said that the near-term revenue and EBITDA contribution from franchise is expected to remain limited. Is there a possibility that you can provide some guidance on that, more specifically for 2026. And related to that, if I'm not mistaken, revenue contribution amounted to EUR 5 million in Q1, which was the revenue contribution of franchise. But it was also EUR 5 million in Q4, whereas Q4 was only 2 months and Q1 is 3 months of contribution. So why is it not a bigger step-up than the flat number of EUR 5 million in Q4 and EUR 5 million in Q1?

Yes. Well, I think if you look at -- it also has to do with timing and it also has to do with what the franchise are paying when they're opening club. So the kick back and so on. So it's -- it's as logical as a member-based monthly subscription that is every month the same. So it varies. But if you look at the full year 2026, we expect -- if you look at the current situation that the turnover will be at least similar to what we had in the last [indiscernible] it will be between EUR 60 million and EUR 70 million turnover for the Clever-Fit organization. So -- but that is a full year. And that is, of course, the combination of the franchise income, the kickbacks and the owned clubs from levered.

The next question comes from Natasha Brilliant from UBS.

I'll ask them one by one as well, just to ease. So the first one is just on the membership trends, up 8% membership per club up 8% year-on-year. Can you just give us a bit more color how that compares by region and how it compares by the different cohorts of clubs. Is that really driven by new clubs? Or is that existing clubs improving as well? Just any more color you can give us on that trend, please?

Yes. So I think when you look at the 8%, I think the countries that did best in the first quarter are our growing countries, our new countries, Spain and France. So that did both very well in the first quarter. If you look at the new club compared to last year, that is, of course, lower because we opened less clubs, so you will see the growth at the -- at all mature clubs that we have. So overall, we're very happy to see that France and Spain are doing very well and also that our mature clubs are continued to grow.

Perfect. The second question is about the franchise opportunity in France. If you can just give us a bit more color on why France? Is it just that's the first one to start with, but we could see after that? Or have you discounted the other markets as well?

No, there will definitely be more countries than France. We think France is -- we can still add an additional 500 clubs because of the finish penetration being low and the fact that we see that new club openings are doing very well. So being able to grow more than 500 clubs in a country is interesting. So we are currently investigating that, and we think that will be a good country to start. But after that, we will add other countries as well. So the focus will be on Germany for sure because we have already there, of course, the franchise organization and the second country will be probably France. And after that, more countries will follow.

Okay. Understood. And then my last question is just on the changes to French regulation. I was very skeptical. So it's great that it's come through. You mentioned some anticipated changes as well. Can you just set out what they might be and how that would drive further cost savings?

Yes. So France. So that is always a bit different than the rest of Europe. So what you see in the rest of Europe, that there all countries are exactly the same. So you have the system in place. If the system is good and safe then you're able to open it without staff. France is -- starts with this number, this 19 people maximum. That makes it, of course, difficult. That means you have to implement reservation system, to be able to -- that you have 18 people in the gym. So yes, there's a limited factor so that means that we can only do it between 1 and 6 in the morning because then we know for sure it will be below 20. So that means you save only 5 hours. If you would do it like all the other countries, you can do it, you can start already at say, 10:30, to say, 6: 30 in the morning. So that is a big difference and that -- the discussions that we are ongoing with the French comment we think at least there were discussions about that this is the start, the first tested period. And if it's gone well, that they will continue to change that and to optimize it because, of course, we clearly explain to what the rest of Europe was doing. But this is the start, but we do expect that in time, that #19 will become maybe 29, 39 and eventually like the rest of Europe, if you have a good system unlimited. So that is why we think that we can grow this 10 million to what we said before, around 50% of the extra investment so that we could grow that number to like 17.5 million and that we could also do it on more clubs than the current 300 that we are talking about.

The next question comes from Karel Zoete from Kepler Cheuvreux.

I have 2 questions in relation to the German market. The first one is, what's the feedback from some of your franchise partners now you're for a couple of months, what are you hearing back? What do they think about Basic-Fit. And the other thing is the dynamics in the German market in general, it's a strong player coming in. What are you seeing in terms of competitive behavior?

Yes, we start with the last question, strong competitor. I think the German market is a very mature market with very sticky members. The fitness penetration is still very low. So if you look at the 83 million inhabitants in Germany and the fitness penetration, it is very strange that it's not similar to what it is, let's say, in the Netherlands. So there is huge room for improvement. We will discuss that a bit more on our Investor Day next week, but we see huge improvement on the German market. So how we look at the German market, we see it as a huge opportunity to grow our business there. But you see a lot at the moment is that some change acquiring other clubs. That is, of course, also a model, but that's not how you grow the market. We also, of course, always look at potential add-ons, but we're mostly focused on opening and building our own clubs. And with that, we will grow the German market. But even though there are players, they are not a lot of big players. So I think the biggest chain has around 250 locations. If you take that on a member or 83 million inhabitants, that is very low. We have 250 clubs in the Netherlands, and we have around 250 clubs in Belgium which, of course, have much less inhabitants. So huge white space, we think we can grow a lot. And that's why we're happy that we will do both in Germany, owned clubs and franchise clubs. The reaction of the franchisees were mixed. Overall, it was positive. They were happy that there was a change, and they were happy with the first steps we have taken. So we have improved some of the purchase things that they're doing, so the equipment for them as of last week is cheaper. The marketing is more interesting and cheaper and so on. So we, of course, have to build the trust. It's not that you buy something in that people fully trust you and believe everything you say. We have to build trust, and we have to show them that we are a good partner, and that's also our goal to grow the company and to make the franchisees more successful. I think it's going very well. I had a call with the franchisees actually 2 weeks ago. normally around 100 of the 160 called in, and now we had more than 200 different people calling in. So that meeting went very well. They were very positive also in the Q&A. I think they're starting -- we're starting to build more trust and some of the franchisees are interesting to open the first Basic-Fit clubs. They're actually looking to see who is the first one to open the club, so everybody is really motivated. A lot of them are also really focused on their current Clever-Fit club that they own already for 10, 15 or 20 years, and very comfortable with that label. So that will also continue, and we will also support them in that way. So overall, I think the start, it's like a marriage. It takes time to build trust. And we're in now for 4.5 months. I think overall, it has been going well.

The next question comes from Marc Zwartsenburg ING.

A couple of questions left on the start of the solution in France. So why you should sure that at some point, the French [indiscernible] okay, let's go to 29, 39 or at some point in line with the other countries because this already took a while. Yes. Why are you so confident that, that will happen.

Well, again, it is France. So there is a risk there. But we -- with the discussions that we had -- we -- and what was discussed, we know that they are open and they said that for improving that amount of members, but they wanted to have a slow start. So it's just -- the trust came out of the discussions that we had to put it that way.

And is that a checkpoint in the future, as you say, we sit together and we review how it went after 6 months or so and then take it from there. Is there any milestones agreed with them? Or is it.

No.

No, nothing. Okay. And because at some point, you could also go with your own staff and that would also save you money...

We will do that...

So you need a bit of a milestone.

Yes. No, but it's clear. So if that is the case, if it feels like that, then we will do that because that saves, of course, also a lot of money. Then we can also grow to the 17.5 million instead of -- but again, we are confident that the 19 number will be pushed up. And if we lose that trust, we will convert.

Yes. Okay. Very clear. Then on the outlook, 10 million extra on the outlook, 4 million, 5 million for France. If you just take a pro forma what the number of yesterday. you take 3 months of extra postponement for Belgium, which is just over 3 million. So there's a limited slight underlying increase in your outlook, if I read that incorrectly? Is that because you're still cautious because, yes, the first quarter was definitely above expectations, but you're correctly on the membership in growth, is that just a bad matter of caution because it's so early in the year that you keep it a bit for yourself or should I read that?

No, Marc...

Was April not looking so good.

No, no, no. Actually, April already started very good year. So No. We really had a strong first quarter, of course. You saw that, that is both on top line P&L, but also we see that reflected also in the costs. So both the overhead and club costs are in line, actually. But as you saw, so we can profit from the change in 24/7 regulations only partly this year. So that's one part of it. And of course, we only calculated -- we only calculated the first months of postponed of the Belgian VAT. If that's further postponed or changed in a good way for us, then that will be this extra tailwind. But for now, we feel comfortable with the extra 10 million that we communicated.

Okay, clear. And then a last one, if I may. I think, Rene, you mentioned by '27, we expect to be at the level of clubs on the Basic-Fit brand in Germany that would warrant a nationwide campaign. So that's 200 clubs, I guess. Maybe give us a bit of a road map how you get there because you're now at 74. You will open some yourself. You will have some comfort at once, but that still there's quite a gap. Is that -- how do you get there?

Yes, we get there by more clubs opening. But I think as you say...

[indiscernible] only do 20 or 25 or so this...

Yes, that's correct. So it should be -- the franchise part should grow. So what we see is that some of the people that started the -- getting the license and are still able to transfer it to Basic-Fit are doing that. So we'll see some of those. We also have a lot of new franchisees that will start with the French -- with the Basic-Fit franchise. So that is also part of it. We will do some small add-ons. We have a couple of Clever-Fit franchisees that want to sell the 1, 2 or 3 clubs to us. So we're in negotiations there. And outside the Clever-Fit, people want to sell the club, we also have some small add-on acquisitions that we are talking to now. In that combination, we expect during 2027 to reach that number.

The next question comes from Robert Jan Vos from ABN [indiscernible].

I have 2 remaining questions. You say that you expect a number of Clever-Fit franchise clubs to transition to own clubs. I think, Rene you mentioned a number in the previous question, but what number should we assume for 2026? And just to be clear does this number come on top -- of the 50 or is it part of the 50 new owned club openings that you expect for this year? And my second question is probably for Maurice, on the convertible bond, you mentioned EUR 159 million is locked up [indiscernible] is further because the exercise of the put is possible as from, if I'm not mistaken, 18th of May. Could it increase further? Or is this it? Those were my 2 main questions.

Well, thanks, Robert Jan. Let me start with the second question. So you are correct. So currently, EUR 159 million of bonds [indiscernible] their put option. So the remainder of the bondholders, we can expect to exercise their put option before the 17th of June. But of course, that largely also depends on the share price. So the share price is about EUR 34 [indiscernible] can expect that they see. But for now, we assume that they will exercise their -- the put option. We have, of course, our bank facilities in place to meet any demand from [indiscernible].

And the other question, acquisitions are on top of the 50. So they will come on top of the 50 clubs that we -- so I think I don't have a concrete number of how many clubs this year or how many clubs next year. We are in discussions with many franchisees with many people. And you never know where that ends. But as soon as we know actually what that -- how many -- once the deal is done and when it's substantial, we will come out and communicate it. But we repeat to be clear, if you do...

Yes. Just to be clear, if you do 10 transitions, then the actual number of new net owned clubs could be 60 then...

Yes. Well. Yes, that's correct, yes.

All right. And if there are no further questions, then to close the call. Thank you all for dialing in and for your input and if there are any remaining questions at the later time, please don't hesitate to call ahead or meet. Thank you very much. Have a nice day.

Thank you. Bye.