Redcare Phamacy Unsp/Adr

Good day and welcome to the SHOP about the earnings release Q2 2021 call. At this time, I would like to turn the conference over to Stefan Feltens. Please go ahead, sir.

Okay. Well, thank you for the introduction. And hello and good morning from Jasper and from me. We have the privilege to welcome you one more time once again to our earnings release from our headquarters here in Severnum. The last quarter, as you already know, of course, had its challenges for shop apotheker. But we can say with confidence that we have and we are making progress with putting these issues behind us. But more about this in a moment. So, what do we want to cover today? We're going to start with what I was just referring to. You know, where are we with the situation in logistics with the temporary capacity constraints? We have experience. We're going to start with this. Then Jasper and I are going to walk you through the financial performance. Phamacy Unsp Phamacy Unsp&Adr Phamacy Unsp&Adr Let me walk you through some of the milestones of moving our business, our activities from the old facility to the new facility. This actually started last year in October when we transferred all the orders from customers in our international segment to our new facility by using some of the capacity here in our new facility and still operating the old facility full steam We were able, this allowed us to post record sales in Q4 last year and again in Q1 2021. In January, we started using our new automated equipment and our automated processes. And then the most important milestone happened in April and in May when we transferred all of the non-prescription orders from customers in the Duff region Phamacy Unsp & Adr Phamacy Unsp in the greater Venlo area, but this is not of course limited to this part of the Netherlands. You know, admittedly, that is something that we had not anticipated, at least not to the full extent. So where do we stand today? We have taken a number of actions in order to address our Manpower shortage. We have enhanced and changed some of our internal processes. We have enhanced and improved our compensation packages. Again, there is a different competitive environment. That is something that has just taken place over the last few days. With this measure, we are confident that we will be able to attract additional talent. to Shop Apotheke, and it will also help us to retain the people that are already working for Shop Apotheke. So it will help us to reduce fluctuation. In addition, we have strengthened our recruiting processes. We have strengthened and increased our recruiting resources. We are, of course, we are doing all of this to get us back onto the Shop Apotheke growth track. And equally, or one might say even more important, we want to have the capacity in place by the end of this year to be able to take advantage of the ERX mandate as of January next year, but also other opportunities that present themselves beyond the boundaries of Germany. Our move to the new facility will actually be concluded by the end of September. when we will have transferred also all the RX orders from the old to the new facility and any or all the orders containing any cold chain products. So shifting gears, Jasper and I are going to walk you through the financial performance in the first half of the year in the second quarter. So what were some of the key facts of the first six months? Our sales increased in the first six months of the year by 15% to 534 million euros. In the second quarter, our sales increased by 8% to exactly a quarter of a billion euros. In Q2, we posted for the six consecutive quarter, for the six quarter in a row, a positive adjusted EBITDA of around a million euros. For the first six months, we generated an adjusted EBITDA of 7 million euros and 1.3% of net sales. of our active customer base continued to increase significantly compared to a year ago. Our active customer base increased by 1.6 million. Our strong operational performance allowed us to generate a positive operating cash flow and Jasper is going to share more details in a couple of minutes. You of course are all familiar with the guidance update that we provided on the 22nd of July. We are now projecting a sales growth, a top line growth of 10 to 15% with an adjusted EBITDA margin at around break even level. So quick look at our two reporting segments, the DAF region and the international segment. Both segments were, of course, impacted by the capacity constraints we experienced in the second half of the second quarter, starting with the international segment. The international segment still, for the first six months of the year, posted a, I can say, solid year-over-year growth of 44%, and of course, for a six-month period, for the first time, They exceeded the 100 million euro threshold. Our DAF business expanded over the first six months by 10% and generated sales of close to 430 million euros. Going back to our active customer base, by the end of June, so as of the 30th of June this year, we had exceeded the 7 million mark of active customers. I know you all are familiar with the definition of an active customer, somebody who has placed at least one order over the last 12 months. The 1.6 million increase is an increase by almost 30%. Moving to the right hand side of the chart, starting with the customer satisfaction measured by the Net Promoter Score, the NPS. Not surprisingly, we experienced in the second quarter some extended delivery times because of the capacity constraints we had. So after an NPS of 70 in the first half, excuse me, an NPS of 70 in the first half of last year, There's a typo on the chart. The NPS in the first half of this year dropped to 68. On the next chart, we're going to share some new and additional insights into the evolution of our Net Promoter Score. Our average basket value came in at 62 euros and 57 cents after it had been a bit above 65 euros in the first six months of 2020. The key driver was the lower share of our RX business, which generates higher average basket values. You know, this is, of course, not what we want and what we had planned for. But again, comparing this to other companies, comparing this to other industries, you know, anything about 60 would still be considered as a reasonably good NPS. But of course, you know, it's not good enough for a shop apotheke. Very encouraging. And I was referring to this earlier. is that we see a recovery of our NPS. The last data point with a score of 71 is again, once again, within our target range. I acknowledge three data points don't necessarily make a trend, but at least the early signs are encouraging that the measures that we have that we have taken are taking hold and helping us to get out of this, out of the valley that we experienced again in the first half of July and in June. So switching to our web traffic, the red line shows the weekly Total visits to all of our websites in all of our markets. You see a peak towards in late February and in March. Then you see a couple of weeks where the web traffic was pretty steady on the right hand side here. And then you see a sharp decline that started in early June. Of course, this is directly related to the capacity constraints we experience and triggered by the capacity constraints, of course, we reduced our marketing investment because we didn't want to generate additional orders that we would have had problems to process. When you look at the blue bars, which show the weekly year-over-year growth, so the growth of our web traffic or the change of our web traffic was the same week a year ago, Phamacy Unsp & Adr has to be seen in the context of the start of the Corona pandemic last year in March and April, when we saw a significant jump in our web traffic. And with this, I'll hand it over to Jasper to walk you through the financials.

Yeah, thank you very much, Stefan. Very clear and good morning to everybody on the call. On this slide, we see the orders per quarter Phamacy Unsp&Adr Phamacy Unsp&Adr Let there be no in clarity, we were aiming for more than the 4.7 million orders that we processed in the current quarter. Another key message on this slide is in the green circles where you are seeing that also in the past quarter, we had more than 80% from our total volume coming from returning existing customers. And we also at the same time had an healthy inflow of new customers continuing. And the last thing I would like to highlight here Of course, the 4.7, we wished it would have been a little bit higher, but it's also clearly our second highest quarter ever, even higher than our very strong fourth quarter of the past year, which was the 4.4. And this is showing the strength with which we entered the second quarter. To the next slide, what did those 10 million orders we did in total in the first half of 2021 bring us in from a number perspective? On this slide, in the customary format, all the key P&L items. And before I start discussing the sales tool, including the adjusted EBITDA, a word on the adjustments. Of course, we had a quarter with turbulence in quarter two, but we continued to apply the same definition of our adjustments. That is mainly the accounting treatment of our ESO program, and the remainder is from one of project related costs. So in the second quarter, this was 2.6 million. The total adjustments exactly the same number as we had in the first quarter of this year. Then go into the sales. Stefan mentioned already the above half a billion of sales that we achieved over the first six months. And this has also given me the opportunity to tell you that the numbers improved slightly versus the preliminary numbers that we released on July 5. Phamacy Unsp. Also, on the 27th of July, we got a question about our Rx developments in Germany. Stefan then responded that the preliminary number was a decline of 26%. The final numbers are is that there Profit margin was around 25.5%, both in the first half and in the second quarter, which was well up year over year. A little bit later, I have a bridge on that. Selling and distribution, it was a bit over 21% of sales. It was up over the first half 3.7% this point versus last year. And in the second quarter, it was up three point, and now I cannot read the number, 3.6%, to be precise. The adjusted administrative costs were around 3%, both in the first and in the second quarter. And all the numbers I just mentioned, if you add them up, you get to the adjusted EBITDA, year-to-date 6.9 million positive, but also in the second quarter, we reported a 1.2 million The gross margin. So it increased from 22.5 by 3 percentage points to 25.5. And if I start with the first building block, it is also the sixth consecutive quarter that we disclose to you that we achieved year-over-year improvements in our sourcing. Half year this year compared to last year, an improvement of 0.1%. which includes vouchers related to RX. The other one of 1.2, also a benefit, but that's mainly mixed. It is mixed in countries and mixed from RX and OTC. And then a more fundamental important building block here of 0.9% is other. There is in part the fact that we had last year higher write downs of COVID related assortment. But the main element in this improvement is a higher media and monetization income. So in this slide, everything related to the gross profit margin fell to the positive. Then the next one, please, Carmen. This is the expenses as a percentage of sales from 17.5%. It increased by 3.7% this point. Clearly, the increase came from higher marketing. On one hand, we had last year a very and this year we invested really in our marketing position. Shipping packaging increase because of the very strong growth we achieved 44% year to date in our international business. The slight increase in operational labor should not come as a surprise. At the moment we are operating two facilities and last year it was just one and the other is mainly reflective of our increase in IT. Next slide, please. And then the cash flow slides. The good thing about cash is that you can talk about EBIT, net income, about adjusted EBIT or non-adjusted EBIT, but cash is what it is. And if I start with the building blocks, then you see that despite some headwinds we experienced in the first half of the year, and we started with an absence of cold and flu, and there was a lower elegy season, the bonus ban on In addition to that, the favorable working capital movements resulted in an inflow of 20 million. So the sum of the two, the operating cash flow, was at 25 million over the first six months of 2020. Investments at 61 million were at an elevated level. It includes the two business acquisitions of the first quarter, Meta and Smart Patient. It includes our investments in the new automated warehouse. and it includes our regular PP&E and IT. And of course, IT, because after all, we are this tech and digital front-runner company. Also this year, we had in quarter one a very successful placement of convertible bonds at a zero coupon, and this is the main reason for the inflow of well above 200 million. On this slide, you see cash, which is defined as cash and cash equivalents, including our short-term financial assets, So we started the year well above 100 million, and we ended the second quarter in a cash position of well above 300 million, a solid cash position. And with that, I hand it over back to you, Stefan. Okay.