Technogym S p A : Press release financial results H1 2022

THE TECHNOGYM BOARD OF DIRECTORS APPROVED THE HALF-YEARLY FINANCIAL

REPORT AS OF JUNE 30, 2022

TECHNOGYM: sales +17.7% in H1

• CONSOLIDATED REVENUES: Euro 325.2 million, +17.7% compared to 276.3 million in first half 2021. +14.9% currency neutral. Strong growth in North America (+52.6%)
• EBITDA ADJ: Euro 51.8 million, +8.0% compared to 48.0 million in the first half 2021
• NET PROFIT ADJ: Euro 25.0 million, +24.7% compared to 20.0 million in the first half 2021
• NET FINANCIAL POSITION: Euro 46.4 million at the end of June, compared to 70.4 million as of June 2021

Nerio Alessandri, Chairman and CEO, commented:

"Technogym has intercepted the business recovery of fitness club, hotels and medical centres, and revenues in the first six months of the year are strongly growing in all BtoB segments and the BtoC customer segment is also well above pre-pandemic levels.

Technogym is today the only brand able to fully grasp all market opportunities thanks to its digital ecosystem, which offers people the possibility of connecting to their personalized wellness experience at the gym, at home, at work, on the road.

Consistency with our premium positioning in the various market segments has also allowed us to maintain adequate profitability and look forward to the rest of the year with optimism.

Being well is good for people, businesses and governments. Today, more than ever, wellness and health are priorities for everyone: all over the world, governments are increasingly focusing on policies centered on prevention and the promotion of healthy lifestyles, companies invest on their staff health and wellness, and people are more and more aware on the benefits of regular exercise"

Cesena (Italia), August 3, 2022 - The Board of Directors of Technogym S.p.A. (MTA: TGYM), one of the world's leading companies in smart equipment, service and digital services for the fitness, sport and health sectors, as part of the broader wellness sector, examined and approved the consolidated half-yearly financial report as of June 30, 2020 today, drawn up in accordance with IAS/IFRS international accounting standards.

The first half of the year shows a strong recovery in the BtoB segments and the confirmation of people's increased interest in health and exercise. During the period, Technogym records a significant acceleration in revenue growth, with double-digit performance in all BtoB segments and achieves revenue 10% higher than in the first half of 2019.

In terms of Adjusted EBITDA there is an improvement compared to last year, although the increase in production costs has not yet been offset by the list price increases decided during the year.

The Net Financial Position decreases compared to 31 December 2021 due to the negative seasonality of the business in the first part of the year, the payment of dividends to shareholders and an increase in Working Capital mainly related to payments to some suppliers in the first months of the current year.

Net Profit Adjusted for non-recurring items significantly improves compared to the last year and benefits from the general recovery of the business.

Innovation remains the driving force behind the growth of Technogym, which in the first half of the year presented Biostrength, the new line for strength training (a fast-growing trend in the market), that, thanks to artificial intelligence, adapts to the needs and goals of each individual user and offers a unique range of training content with the aim of guaranteeing 30% more results for the same training time.

Moreover, new Technogym App features and new video content have been launched as part of the Technogym Live platform to further enhance the user's training experience

Today Technogym is present in over 85 thousand professional centres and over 22 million users use the MyWellness platform and the Technogym App to support their workout.

During the half-year, the company continued its commitment to marketing and communication activities, as well as to the development of new training content, aimed at maintaining Technogym's positioning as a Premium brand in the BtoB sector and Prestige in the BtoC sector, and at supporting the company's role as an end-user training partner with a hybrid approach, thus capitalising on the growing interest of end-users in Wellness on the go launched by Technogym back in 2012.

Results of the First Half of 2022

The consolidated results have been prepared in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board and approved by the European Union.

Here below we provide a brief overview of consolidated revenue and other main items among Profit & Loss and Balance Sheet.

1) Revenue

The first half records a 17.7% increase in sales (+14.9% at constant exchange rates), thanks to a strong recovery in all BtoB segments, while the BtoC customer segment records a double turnover compared to pre-pandemic levels. It's worth mentioning the double-digit growth in almost all geographical areas confirming the validity of the long-term strategy of Technogym.

Here below we provide a brief revenue analysis for:

• Client category;
• Geographical area;
• Distribution Channels.

Revenues by Client Category

(In thousands of Euro and percentage change)			H1 as of June 30
	2022	2021	'22 VS '21	%
BtoC	83,842	97,216	(13,374)	(13.8%)
BtoB	241,380	179,038	62,341	34.8%
Totale Revenues	325,223	276,255	48,968	17.7%

Revenues for the first half of the year confirm the progressive recovery of the BtoB segment, as in previous quarters, thanks to double-digit growth registered in all sub-segments; strong performances in the Club and Hospitality & Residential segments. In the first half of 2022, BtoB revenue further closed the gap compared to the performance of the first half of 2019. The BtoC segment recorded a physiological slowdown compared to last year but stood at more than double the value recorded in H1 2019.

Revenues by geographic areas

			H1 as of June 30
(In thousands of Euro and percentage change)	2022	2021	2022 vs 2021	%
Europe (ex Italy)	150,824	127,848	22,976	18.0%
APAC	60,122	53,200	6,922	13.0%
Italy	29,388	31,535	(2,147)	(6.8%)
North America	45,318	29,692	15,626	52.6%
MEIA	32,070	28,044	4,026	14.4%
LATAM	7,501	5,936	1,565	26.4%
Totale Revenues	325,223	276,255	48,968	17.7%

In terms of geographical areas, top performances were reported in Europe and North America. The excellent performance in North America (+52.6%) is supported by growth in the Hospitality & Residential and Club segments. In Europe (+18.0%), the progressive recovery of the BtoB segment, starting from Club, generated strong growth in the UK, Germany, France, Benelux and Spain. Good performance in APAC (+13.0%), where growth in Australia, Japan, Hong Kong and some markets covered by the Wholesale channel, like Thailand and Vietnam, more than offset the performance of China, impacted by the restrictions aimed at containing COVID-19. The MEIA region continued to grow, significantly above H1 2019 sales, while in LATAM the first signs of recovery after the lockdown continue to be seen.

Revenues by distribution channels

			H1 as of June 30
(In thousands of Euro and percentage change)	2022	2021	2022 vs 2021	%
Field sales	207,301	159,216	48,085	30.2%
Wholesale	77,822	68,612	9,210	13.4%
Inside sales	33,500	42,336	(8,836)	-20.9%
Retail	6,600	6,091	0,509	8.4%
Totale Revenues	325,223	276,255	48,968	17.7%

The trend of the market segments is also reflected, as usual, in the evolution of the sales channels. The two channels most exposed to the Commercial segment, Field Sales and Wholesale, have registered the greatest growth in the half-year. In particular, the growth in Field Sales is linked to a higher productivity, compared to last year, of individual salesmen with the same sales network, while the growth in the Wholesale channel is the result of the excellent performance achieved by some distributors in APAC but also in Europe and MEIA. The retail channel performed well, also thanks to the contribution of the new Munich boutique. Inside Sales, which, as we recall, includes teleselling and e-commerce, is the only channel in contraction as it is mainly exposed to the general trend of the BtoC segment.

2) EBITDA, Operating Income and Net Profit Adjusted

Adjusted EBITDA amounted to € Euro 51.8 million, up by € 3.9 million (+8.0%) compared to € 48.0 million in the first half 2021. This increase is attributable to the increase in sales volumes and the increase in list prices, which only partially offset the increase in costs related to raw materials and logistics recorded in the first half of 2022.

There was also a return to the normal seasonality of the business, characterized by higher marketing costs for trade fairs and events in the first half of the year, as well as an increase in after-sales service activities compared to the first half of 2021, which had not seen fitness clubs operating at full capacity as in 2022. In this scenario Technogym was able to record an Adjusted EBITDA as a percentage of revenue of 15.9% at 30 June 2022 (17.4% as of 30 June 2021).

Adjusted Operating Income stands at € 30.3 million, up by € 2.6 million (+9.2%) compared to € 27.7 million in the same period of 2021. This trend is impacted not only by the aforementioned dynamics, but also by higher depreciation and amortization recorded compared to the previous year as a result of the investments made to digitize the offer, both with reference to the new technologies used and the development of content. Overall, the Adjusted ROS for the period was 9.3% (10.0% in the first half of 2021).

Adjusted Net Profit amount to € 25.0 million, up by € 5.0 million (+24.7%) compared to Euro 20.0 million in the first half of 2021. This trend is in line with the above.

Lastly, it should be noted that the six months ended 30 June 2022 reported non-recurring expenses of

• 1.5 million, mainly attributable to personnel costs and related charges not related to normal operations. Non-recurring income of € 11.1 million related to the capital gain obtained from the sale of the shares held in Amleto APS (Exerp Group) and non-recurring charges of € 812 thousand were recorded for the six months ended 30 June 2021.

3) Net Financial Position

The Net Financial Position is positive at € 46.4 million, compared to € 96.0 million as of 31 December 2021 and € 70.4 million as of 30 June 2021. This trend in the semester is related to the business seasonality in the first part of the year, to the payment of dividends to shareholders for approx. Euro 32 million, to higher investments as well as an increase in Working Capital mainly related to the payment of trade payables due in the first months of the year.