Viva Leisure guides to higher FY22 earnings

The uptick in demand for gyms doesn’t appear to be under threat, following inflation fears, with listed small-cap Viva Leisure (ASX: VVA) expecting to exceed guidance for FY22.

Today’s market update comes after Viva posted a record monthly revenue run rate of $9.5m in April 2022, up 10.3% on the previously reported February 2022 numbers.

After achieving the monthly revenue milestone of $10m in May, Australia’s second largest health club owner and operator now expects to exceed the previous guidance of $54m-$56m.

Founded in 2004, Viva operates over 145 locations within the ACT, NSW, Vic, Qld and WA.

Then there’s the master franchise for the Plus Fitness group of approximately 200 clubs in three markets – Australia, NZ and India.

Other highlights announced today include:

• June earnings (EBITDA) margin expected to exceed 20%

• Second half margins are also tracking toward the upper end of the previous guidance of between 15-17%

• April 2022 annualised Revenue Run Rate now exceeding $116m

• Total corporate members increased to 150,000 (as of 30 April), up from 145,000 in February 2022

• Average Revenue Per Member (ARPM) increased to $14.28 in April 2022, up from $13.95 in February 2022

Structural growth

Commenting on today’s announcement, Viva’s CEO Harry Konstantinou notes strong performance over March and April was supported by an additional 5,000 corporate members.

The company plans to continue its growth-by-acquisition strategy and recently entered the WA market with five Plus Fitness acquisitions, three of which are yet to be completed.

“Along with an additional three acquisitions expected to settle in June, this cements Viva’s position as… the only one that operates in all four segments of the fitness industry.”

Down -6.94% today at the close, the Viva share price is down -29.50% over the last year.

Viva Leisure share price over 12 months.