Diapositiva 1 - Sports World

Grupo Sports World, S.A.B. de C.V.
May 2012
1
Sports World: during its first year as a listed company
CONFIDENCIAL
CONFIDENTIAL
 October 7, 2011 marked the first anniversary of GSW as a publicly traded company.
 During 2011, 5 new clubs were opened.
 A new business model was introduced, which targets the B-/C segments of the
population and will complement the company’s expansion plans.
 So far in 2012, 2 clubs have been opened: Luna Parc & Pabellon Bosques; 6 clubs are
currently under construction and pre-selling memberships.
 We expect to be operating 25 clubs by the end of 1H12, increasing our portfolio by over
60% YOY.
 Several additional contracts have been signed for openings scheduled during 2012-2014.
2
The History of Sports World
SW is born
First club:
Centenario
Institutionalization
process
Nexxus
Capital
acquires
67% of the
company
CONFIDENCIAL
CONFIDENTIAL
Expansion Plan
Consolidation
Stage
Consolidation
of operations
of the existing
clubs
4 new clubs
are opened :
Interlomas,
Hermosillo,
4 new clubs
Santa Fe &
are opened:
Coacalco
Patriotismo,
Puebla,
Arboledas &
Monterrey
IPO
IPO.October 7,
2010
New clubs
2011
Resources
obtained through
IPO are used to
initiate a new
expansion phase
5 new clubs
are opened:
Condesa,
Palmas,
Altavista,
Paseo Interlomas
& San Jerónimo
New clubs
2012
Luna Parc &
Pabellon Bosques
are opened;
6 clubs currently
pre-selling
memberships:
Pedregal,
Amores,
Anzures,
Veracruz,
Prado Sur &
Antara.
Year
1996
2005
2007
2008
2009
2010
2011
2012¹…
CLUBS
1
5
10
14
14
14
19
27 <
1. As of today, Sports World has signed several lease contracts for new locations and the company is continuously looking for new opportunities.
3
CONFIDENCIAL
CONFIDENTIAL
Positive tendencies within our industry…
The industry is highly fragmented…
With few formal competitors…
12.4
8.8
No. of clubs per
100 K
inhabitants 1
1.9
Argentina
Brazil
# of Clubs
5,200
18,195
2,200
# of Users
1,302,000
5,458,500
2,498,100
42
206
115
Population (Millions)
21 Clubs
48 Clubs
4 Clubs
7 Clubs
Mexico
and a low level of penetration…
16.8%
16.2%
16.0%
11.7%
Spain
Canada
US
UK
 Cultural changes & greater understanding of fitness
related benefits.
 Exercising daily helps reduce2:
 Risk of heart disease by 40%
 Risk of stroke by 27%
 High blood pressure by 50%
 Diabetes by 50%
 Risk of different types of cancer by 50%
 Each $1 USD invested by a firm in employee
wellness can increase profits by $1.49 ≤ $13. 2
% of
population
that attends
clubs 1
3.1%
2.7%
2.2%
Argentina
Brazil
Mexico
1. Source: The 2011 IHRSA Global Report on the State of the Health Club Industry
2. The IHRSA CEO Pledge.
4
Business Cycle
%
of 100%
O 90%
c 80%
c 70%
c 60%
u 50%
p 40%
a 30%
n 20%
c 10%
0%
y
Location selection
criteria
 Type of area
 Demand for services
 Population density
 Socioeconomic status
 Access routes
 Format definition
CONFIDENCIAL
CONFIDENTIAL
Construction
Pre-Sale
Break-even
1
3
Growth
12 to 18 months
O
p
e
n
i
n
g
5
 Pre-Sale:
 Direct marketing
strategies.
 Construction:
 Contractors
 Develop the format so
that it will successfully
fulfill the necessities of
the location.
7
9
11
MONTH
13
 After reaching the break-even of a
club, each additional user reflects an
increase in profit margin.
 The profitability of each club
increases substantially.
5
Retention strategy &
cross-selling.
15
17
18
 Personal service achieves
user satisfaction.
 Increase additional sources
of income (sports
programs, personal
training, etc.)
CONFIDENCIAL
CONFIDENTIAL
Business Models
Business Model #1
Business Model #2
Business Model #3
Segment: B- / C
Segment: A / B
Segment: A / B
Target: Individuals
Target: Individuals
Target: Families & Individuals
M²: ±1,700
M²: ±2,000
M²: ±3,000
Construction timeframe: ± 4
months
Construction timeframe: ± 4
months
Construction timeframe: ± 6
months
CAPEX
CAPEX
CAPEX
$20 Million
Pesos
$28 Million
Pesos
$38 Million
Pesos
Cardio, free weights,
integrated weights & lockerrooms.
Cardio, free weights,
integrated weights & lockerrooms.
Cardio, free weights,
integrated weights & lockerrooms.
Fewer multiple use rooms
with a greater capacity per
room.
More group fitness rooms,
more luxurious facilities and
greater array of
complementary services.
More group fitness rooms,
more luxurious facilities and
greater array of
complementary services.
Children´s area, pool, squash
& sports courts.
6
Expansion 2011-2012
CONFIDENCIAL
 The Company expects the 5 clubs opened in 2011 to reach their theoretical capacity during 2012.
 The Company expects to open 6 clubs during 1H12. More openings are planned during 2H12, which will be
announced as construction and the pre-sale of memberships get underway.
Condesa
%
of
90%
O
c
c
u
p
a
n
c
y
70%
Palmas
%
of
80%
O
c
c
u
p
a
n
c
y
60%
50%
40%
30%
20%
10%
0%
APR MAY JUN
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR
SEP
OCT
NOV
Month
O
c
c
u
p
a
n
c
y
Paseo Interlomas
80%
%
of
70%
60%
50%
40%
30%
20%
10%
0%
NOV
DEC
JAN
FEB
Month
*figures as of 04/30/12
MAR
APR
JAN
FEB
MAR
APR
Month
Altavista
%
of
DEC
O
c
c
u
p
a
n
c
y
San Jeronimo
%
of
40%
35%
O
c
c
u
p
a
n
c
y
30%
25%
20%
15%
10%
5%
0%
DEC
JAN
FEB
Month
7
MAR
APR
60%
50%
40%
30%
20%
10%
0%
DEC
JAN
FEB
Month
MAR
APR
Current and future locations
CONFIDENCIAL
CONFIDENTIAL
2011 & 2012 openings
Mexico City & metro area
Mexico City &
metro area
SW Tijuana
n
n
n
n
n
n
n
n
n
n
SW Hermosillo
SW Monterrey
SW Centenario
SW San Ángel
SW Valle
SW Tecamachalco
SW Satélite
SW Patriotismo
SW Arboledas
SW Interlomas
SW Coacalco
SW Santa Fe
OPEN






SW Veracruz
SW Puebla
Hab/ km 2
0 – 20
100 – 160
20 – 40
160 – 300
40 – 60
300 – 700
60 – 100
700+
= clubs opening during 2011/2012
8
SW Condesa
SW Palmas
SW Altavista
SW Paseo Interlomas
SW San Jeronimo
SW Luna Parc
Under Construction






SW Pedregal (2012)
SW Anzures (2012)
SW Pabellon Bosques (2012)
SW Amores (2012)
SW Prado Sur (2012)
SW Antara (2012)
Comparable Firms
CONFIDENCIAL
CONFIDENTIAL
BMV: SPORT
• Solid financial structure
• Presence in Mexico
NYSE: LTM
• Luxury facilities
• Formats targeting families and
individuals
• Urban clustering strategy
• Family format
• Rapid growth
• Priority investments in CRM
systems
•
•
•
•
•
•
•
•
• National presence
in the USA
• Located predominantly in
suburban areas
• Cross-selling accounts for
40% of revenue
Public Company
100% fitness
Industry leader
Centralized services
Extensive sports offerings
Replicable formats
Economies of scale
Complementary products
& services
• Different levels of
membership available
NASDAQ: CLUB
Town Sports International
• Different brand in each market
• Regional presence in the USA
• Recent corporate and
operational restructure
9
Highlights of the year
CONFIDENCIAL
CONFIDENTIAL
 A restructure in the Real Estate department of the company has allowed us to expedite
the search and negotiation of new locations; several new leasing contracts have been
signed for future locations.
 The first club targeting the B-/C segment of the population has been opened in the Luna
Parc shopping center in Cuautitlan Izcalli, in the State of Mexico.
 A new COO has been appointed, his previous experience includes Walmart & Liverpool.
 A new Marketing Director was appointed in order to help the company strengthen its
brand and increase the offerings of complementary services.
 A new pricing strategy has been adopted in order to improve member satisfaction and
retention rates.
 The company is currently unleveraged, however a $200 million peso credit line has been
secured.
10
Operating Income – Expense Relationship
CONFIDENCIAL
CONFIDENTIAL
120%
100%
% of Total Income
80%
60%
Income
Expenses
40%
20%
0%
0
1
2
3
4
5
6
7
8
9
10 11 12
Months
 The expenses incurred during the pre-sale and construction period are
recognized immediately, meanwhile the income from membership sales
are not recognized until the club begins to operate.
11
Financial Results
CONFIDENCIAL
CONFIDENTIAL
Sports World has maintained considerable and constant revenue growth for over 3 years. Currently the preoperating expenses from the clubs under construction has temporarily decreased the EBITDA, however net
income continues to rise.
Revenue (millions of MXP)
516
536
469
447
382
288
CAGR
15.7%
2007
2008
2009
2010
EBITDA1 (millions of MXP)
2011
LTM 1Q12
Net Income (millions of MXP)
115.8
38.8
100.1
81.8
31.0
2007
2008
30.1
80.9
1.0
29.6
CAGR
25.3%
2009
40.0
2010
2.2
Growth
MXP 40.9M
-10.8
2011
LTM 1Q12
1. Calculated by adding EBT, financing expenses ,depreciation and amortization.
2007
12
2008
2009
2010
2011
LTM 1Q12
CONFIDENCIAL
CONFIDENTIAL
KPI’s
Active Users
30,000
29,000




28,000
27,000
2010
26,000
2011
25,000
Some of our KPI’s:
Active Users
Membership Sales
Churn (Attrition)
Monthly Visits
24,000
23,000
1Q
2Q
3Q
Average Monthly Visits
4Q
220,000





210,000
Some of our KPI’s:
Users per Membership
Users by age group
Mix of memberships and maintenance
fees.
Type and number of group classes.
Inscription level to each sports program.
200,000
190,000
2010
180,000
2011
170,000
160,000
150,000
1Q
13
2Q
3Q
4Q
Share Performance
CONFIDENCIAL
700,000
 Medium Marketability.
 ADTV for the last 3 months as of April
30, 2012 of 135,000 shares of $1.9
million pesos.
600,000
500,000
400,000
300,000
SPORT
200,000
100,000
-
120.0%
 “SPORT.S” has increased its value by
16.1% during 2012.
 The current price still offers a 9.6%
discount vs. IPO.
 The mexican index IPC has gained
6.4% during the same period.
115.0%
110.0%
105.0%
100.0%
SPORT
IPyC
95.0%
90.0%
85.0%
14
Investment Highlights
CONFIDENCIAL
CONFIDENTIAL
 Sports World is one of the largest chains of family sports/fitness clubs in Mexico and the
only public company in Latin America that is solely focused in the fitness industry.
 SW competes in a highly fragmented industry that is characterized by having few
Institutional Competitors.
 High growth potential: There is a higher level of consciousness in Mexico regarding
personal wellness and a stronger effort is being made on fighting obesity.
 Sports World differentiates itself from its competitors by offering a family-oriented
format. Over 44% of its members belong to a family membership and 25% of the area
in the clubs belonging to the family format is dedicated to children´s activities.
 Attractive business plan that includes a highly experienced management team as well as
a certified staff and multidisciplinary trainers.
 High Corporate Governance Standards: 5 out of 9 board members are independent.
15
Contact Information
CONFIDENCIAL
CONFIDENTIAL
CFO
Roberto Alvarez Falcón
Investor Relations
Roberto González Heredia
Tel (55) 5481-7790
inversionistas@sportsworld.com.mx
www.sportsworld.com.mx
16
Annex
CONFIDENCIAL
CONFIDENTIAL
17
Income Statement
CONFIDENCIAL
CONFIDENTIAL
First Quarter
(Thousands of nominal mexican pesos)
2012
January - March
2011
% Var
2012
2011
% Var
Net Revenue
146,462
118,093
24.0%
146,462
118,093
24.0%
Clubs' Operating Expense
130,018
85,580
51.9%
130,018
85,580
51.9%
13,906
9,171
51.6%
13,906
9,171
51.6%
72.5%
16.3 pt
72.5%
16.3 pt
Depreciation & Amortization
% of Operating Expense to Net Revenue
88.8%
88.8%
Gross Contribution
16,444
32,513
(49.4%)
16,444
32,513
(49.4%)
Corporate Expense
17,805
18,236
(2.4%)
17,805
18,236
(2.4%)
Operating Income (1)
(1,361)
14,277
(109.5%)
(1,361)
14,277
(109.5%)
Operating Income Margin
-0.9%
12.1%
-13.0 pt
-0.9%
12.1%
-13.0 pt
Net Financing Expense
1,972
2,586
(23.7%)
1,972
2,586
(23.7%)
Net Income
520
18,825
(97.2%)
520
18,825
(97.2%)
Net Income Margin
0.4%
15.9%
-15.6 pt
0.4%
15.9%
-15.6 pt
Average number of shares outstanding
EPS (2)
83,118,949
$
EBITDA
EBITDA Margin
0.01
12,546
8.6%
83,118,949
$
83,118,949
0.23
(97.2%)
23,448
(46.5%)
19.9%
-11.3 pt
(1) Operating Income includes non-recurring income (expense).
(2) The EPS is calculated by dividing Net Income for the period by the average number of shares outstanding during the period.
18
$
0.01
12,546
8.6%
83,118,949
$
0.23
(97.2%)
23,448
(46.5%)
19.9%
-11.3 pt
Balance Sheet
CONFIDENCIAL
CONFIDENTIAL
Thousands of Mexican Pesos
As of March 31,
2012
As of March 31,
2011
Var $
Var %
Mar´12 vs Mar´11 Mar´12 vs Mar´11
Balance Sheet Information:
Ca s h a nd Equi va l ents
Adva nce Pa yments
Improvements to l ea s ed properties ,
cons tructions i n progres s a nd furni s hi ngs
Total Assets
Suppl i ers , credi tos & others
Deferred Income
Total Current Li a bi l i ties
Current portion of LT l oa ns from fi na nci a l
i ns titutions
LT l oa ns from fi na nci a l i ns titutions
Total Liabilities
Stockholders' Equity
183,038
34,721
547,123
430,741
10,652
337,837
-247,703
24,069
209,286
(57.5%)
226.0%
61.9%
930,950
85,627
75,218
162,369
-
910,175
40,295
59,703
133,837
32,500
20,775
45,332
15,515
28,532
(32,500)
2.3%
112.5%
26.0%
21.3%
(100.0%)
212,920
718,030
24,375
200,559
709,616
(24,375)
12,361
8,414
(100.0%)
6.2%
1.2%
Worki ng Ca pi tal (1)
Worki ng Ca pi tal mi nus ca s h
82,872
-100,166
317,333
-113,408
-234,461
13,242
(73.9%)
11.7%
( 1) W o r king cap it al is calculat ed b y sub t r act ing cur r ent liab ilit ies f r o m cur r ent asset s.
19
Disclosures
CONFIDENCIAL
CONFIDENTIAL
This presentation and all the information herein included have the purpose of serving as an general overview of the company, Grupo Sports World, S.A.B. de
C.V. (“Sports World” or the “Company” or “Firm” ) and its situation as of this date. All the information herein included has been summarized and does not
intend to serve as a detailed presentation of the company or its operations. This document does not guarantee the degree of accuracy of the information
herein mentioned or included nor does it guarantee the unbiased nature of the information nor does it imply that the information presented is enough to
fully depict the company and its current situation.
This document may include certain forward-looking statements or certain goals or expectations that the current management may have, related to the future
of the firm or to specific future events. Forward-looking statements include but are not limited to: any statement that intends to predict, forecast or imply
certain results for a future period in time. These statements can include but are not limited to statements that include the following words or references:
“believe”, “anticipate”, “expect”, “foresee”, “will result”, “may result”, “predict”, or any other word or phrase of similar nature that serves a similar purpose.
All expected future results or performance of the company is subject to certain risks and scenarios that may or may not present themselves. We warn you
that any number of factors may, can or will cause the actual performance of the company to differ to any degree from the expectations included or expressed
within this presentation. This company, its subsidiaries, affiliates, Directors, managers, employees or any other person or entity related to it in any way WILL
NOT be held liable in any way or to anyone for any negative results or damages that may be incurred by an investment or business decision based solely on
the information provided in this document/presentation.
Any information relating to the market including but not limited to prices and price forecasts or competitive positioning in any of its forms, included in this
document/presentation have been obtained through internal surveys, market research and public information available through different agencies or
entities. Even though we have no reason to doubt the veracity of the information obtained through the previously mentioned methods the company has not
independently investigated the accuracy of said information, thus Sports World takes no responsibility for any mistakes, errors or inaccuracies relating to
competitive positioning, market participation, market size, market growth or any other information that has its origin with a third party or that was obtained
through publications without regard to the industry to which these publications are directed or targeted. Sports World, existing stockholders, or any entity or
person related to the firm or working closely with the firm make no assurance as to the accuracy off the aforementioned information.
This document, its content and anything that may be derived from it are solely the property of Grupo Sports World and may not be fully nor partially
reproduced or redistributed without the previous written consent of the company.
This document/presentation and the information herein included do not constitute an offer to sell or allocate equity or stock of any kind, nor are any stock or
equity being offered through it. Any person or entity interested in acquiring any equity or stock of this firm should analyze all of the information available to
the public, including but not limited to the initial prospectus, any periodic filings that the company has elaborated to the Mexican Stock Exchange ( BMV) as
required by law; all of this information is available through the company´s website at www.sportsworld.com.mx or through the website of the Mexican Stock
Exchange (BMV) at (www.bmv.com.mx).
This document/presentation should not be considered as an offering to buy or sell any stock or equity in the firm or any other firm. Its full or partial
distribution, whether direct or indirect, is prohibited in any and all territories outside of Mexico where local laws make it illegal to distribute this information.
Sports World´s stock trades at the Mexican Stock Exchange (BMV) under the ticker symbol: SPORT.