International Benchmarking and Financial KPI's

2. International Benchmarkingand Financial KPI's Paul Kuebler, Co-Owner Master Franchisee- Eastern Europe/Russia

3. Course Summary & Objective • In this course, attendees will learn about Financial benchmarks and how they apply to clubs internationally. While this course will have some general KPI’s and benchmarking information, it will also focus on the indicators that we use internationally that seem to translate well from country to country and remove currency issues and differences due to having clubs in multiple jurisdictions. • Take-away’s • Template for comparing several financial performance indicators and how use the template. • How to compare KPI’s from club to club and over time.

4. Financial KPI’s & Benchmarking • Ways we benchmark- club vs. club; club vs. norms (GG and IRHSA); quarter vs. quarter, year vs. year • Why benchmark? • Choosing KPI’s • Areas to use KPI’s that are not financial • Frequency of Reporting of KPI’s • Examples used by our company

5. Accurate & consistent measurement Essential to be able to compare between periods or clubs Detailed description of KPI for financial people, check and recheck data until you are sure that they know how to compile information properly

6. Areas to use KPI’s • Membership Sales- MAL tracking stats, InTouch, results vs. monthly plan • EFT collection and retention stats; overall retention • Orientation, Intro-pack, and PT- conversion rate stats • Auxiliary sales- versus budget, vs. members, vs. prior year • Financial- versus budget, prior year- percent of sales • Employee performance- versus check list, versus objectives • Club inspections- versus checklist • Customer feedback- Medallia

7. Our KPI Dash Board Go to File

8. Financial KPI’s • Gross Income- % change from Prior Period (PP) • PT Net Revenue- % change PP; % of Gross Inc. • Marketing & Sales Expense- % change PP; % of Gross Inc • Payroll- % change PP; % of Gross Inc. • Occupancy Costs- % change PP; % of Gross Inc. • EBITDAR-(Earnings before Interest, Taxes, Deprec., Amort., and Rent) - % change PP; % of Gross Inc. • EBITDA- % change PP; % of Gross Inc. • Unit Sales-% change PP • Annual Attrition- percentage and % change from PP • Net Members-% change PP

9. Doc

10. Financial KPI’sDefinitions 1 of 2 • Gross Income(A) is the total revenue generated by your company from all sources within your 4 walls. This column is calculated as A from the current LTM (1 Feb- 31 March 2014) period divided by A from the prior LTM (1 Feb- 31 March 2013) period, so it is only the percentage change from the two years. • PT Net Revenue (B) is the total revenue generated from all forms of personal training, including small group training, less all direct costs, including payroll, associated with delivering the personal training. This allows a comparison of this metric between companies that hire and pay personal trainers as employees, and those who collect "rent" from personal trainers. This column is calculated as B from the current LTM period divided by B from the prior LTM period. • PT Net Rev Change: This column is calculated as B from the current LTM period divided by A from the current LTM period. • Marketing and Sales Expense (C) is the total of all direct and indirect costs, including advertising, marketing payroll, sales payroll, commissions and management, associated with generating Gross Income. This column is calculated as C from the current LTM period divided by C from the prior LTM period. • Marketing Change: This column is calculated as C from the current LTM period divided by A from the current LTM period. • Payroll (D) includes all payroll, other than payroll related to the delivery of personal training that was deducted in arriving at B, payroll paid to sales in C, and any head office payroll. This column is calculated as D from the current LTM period divided by D from the prior LTM period. • Payroll Change -This column is calculated as D from the current LTM period divided by A from the current LTM period. • Occupancy Costs (E) include rent, utilities and any other charges, such as CAM or taxes, that are passed through by a landlord under the lease. This column is calculated as E from the current LTM period divided by E from the prior LTM period. • Occupancy Costs Change This column is calculated as E from the current LTM period divided by A from the current LTM period.

11. Financial KPI’sDefinitions 2 of 2 • EBITDAR (F) is earnings before interest, income-related taxes, depreciation, amortization and rent. It is a measure of operating income that attempts to exclude the effects of financing decisions, including the decision to rent or buy the space from which the business is operated. It also normalizes for the differing income tax levels of various locations. This column is calculated as F from the Current LTM period divided by F from the prior LTM period. • EBITDAR Change This column is calculated as F from the current LTM period divided by A from the current LTM period. • EBITDA (G) is earnings before interest, income-related taxes, depreciation and amortization. It is a measure of cash flow from the business in its current location, since rent is subtracted from EBITDAR to arrive at EBITDA. This column is calculated as G from the current LTM period divided by G from the prior LTM period. • EBITDA Change This column is calculated as G from the current LTM period divided by A from the current LTM period. • Unit Sales (Z) is the total number of non-short-term memberships sold by your company. This column is calculated as Z from the current LTM period divided by Z from the prior LTM period. • Annual Attrition % (H) is calculated as the total number of members who cancelled in the LTM, divided by the membership total at the beginning of the LTM period. Eg., a group with 100,000 members on 1 February 2013 that loses 40,000 members during the twelve months ended 31 March, 2014 would have Annual Attrition of 40%. Short-term memberships of three months or less should not be included in the membership balance or counted as cancelled members when they leave. • Annual Attrition Change This column is calculated as H% from the current LTM period divided by H% from the prior LTM period. • Net Members (J) is the change in the membership balance from the beginning of the LTM period to the end of the LTM period. Eg., a group with 100,000 members on 1 February 2013 that has 110,000 members on 31 March 2014 would have +10,000 Net Members. This column is calculated as J from the prior LTM period divided by J from the current LTM period. In this example, that would result in a Net Members % ∆ of 10%. Short-term memberships of three months or less should not be included in the membership balance or counted as cancelled members when they leave.

12. Membership KPI’s • Team and Individual • Leads, Referrals, WI’s, Calls, Appts., Shows, Sales • Calls/Op ratio- • Calls to Appointment ratio • Show ratio • Close ratio • Renewal % trailing twelve months. Doc

13. EFT Billing KPI’s • New Sales vs. Budget • % Cancelled to EFT run • % Failed to EFT run • % increase on net EFT run • % Collected (after manual collection) to EFT run • Net rejections as percent of EFT run

14. New Member (MOB) KPI’s • % of Intro packs (IP) to new members sold- goal 30% • % of IP used-goal 80% • % of IP converted to PT client-goal 20% • % of orientations (free) booked (not IP clients)-goal 20% • % of orientations used-goal 50% • % of orientations converted to PT-goal 20% Doc

15. Budget KPI’s • Actual versus budget • Actual versus PY • Actual versus forecast (revised budget) Doc

16. Employee Performance • Versus checklist • Versus Objectives • Annual reviews Doc

17. Club Inspections Doc

18. Customer Feedback- Medallia • Benchmark against our clubs and all clubs • Take into account cultural biases • GM calls or emails all responses • Positively received by members Doc

19. Thank you for your attention- Please fill out surveyPaul J. Kuebler- Int’l benchmarking & financial KPI’s • Please fill out survey through the mobile app!!! • I will make all excel files, the dashboard template, and this presentation available in the mobile app download area.